Overview of Decentralised Derivatives

Crypto derivatives dominate the market today, representing about 70% of the entire crypto market. In this report, we shed light on derivatives in DeFi, their market overview, and some innovations in the space.

Mar 02, 2023
Overview Of Defi Derivatives

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Key Takeaways

As of January 2023, crypto derivatives continued to dominate the market, representing  about 70% of the entire crypto space, and are worth US$2.04 trillion today. While far from the volume levels seen in May 2021, this still recorded a percentage increase of 76.1% from December 2022.

Monthly Spot Vs Derivatives

Centralised crypto exchanges still lead the crypto derivatives market by a wide margin in terms of trading volume. However, decentralised derivatives displayed significant growth last year. There are certain benefits that DeFi derivatives offer today, such as higher transparency and innovative system design, and projects like GMX have gained traction during the bear market in 2022.

Tvl Of Top Dex Derivative Protocols

Data shows that perpetuals are the main derivatives product in DeFi, contributing 90% of TVL of decentralised derivatives. Amongst the perpetual futures protocols, GMX, dYdX, and Gains Network have taken the spotlight since 2022, as they gained the most market share based on TVL. Furthermore, GMX’s TVL accounted for over 48% of overall perpetual TVL, followed by dYdX. However, when looking at the trading volume, dYdX was 4x as large as the sum volume of GMX and Gains Network combined.

A deep-dive analysis on GMX and Gains Network protocols is also available on our latest private research report.

Market Share Of Dex Derivative Protocols

We saw a trend around Dopex and Lyra, which are options protocols built on Layer-2, came into the spotlight last year; Opyn, a DeFi options trading protocol on Ethereum, gained traction in the first half of 2022 but lost the market in the second half. Furthermore, Dopex proposed the concept of ‘OpFi’ (Options-powered DeFi), which is seen as the next driver in DeFi.

Interested readers can learn more about OpFi on our latest private report.

Percentage Of Tvl In Decentralised Options Market

Aside from perpetual futures and options, there are other derivative types in the market today. Everlasting options are considered the equivalent of perpetual futures, giving traders long-term options exposure without having to roll their positions forward. Meanwhile power perpetuals are perpetual derivatives indexed to a power of the price of an underlying asset. A quadratic power perpetual like Squeeth draws parallel to a perpetual swap, tracking the price of ETH to the power of two.

Convexity Squeeth Vs Leverage Vs Spot

Read the full report: Overview of Decentralised Derivatives


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