Crypto’s largest speculators have a new option to trade decentralized bitcoin derivatives.
On Tuesday, Solana-based DeFi protocol Hxro announced the launch of its decentralized platform to trade several different types of bitcoin perpetual futures using USDC as collateral. As part of the beta launch, certain white-listed trading firms and individuals will be able to trade bitcoin against USDC in futures contracts that expire on a weekly, monthly and quarterly basis. The project plans to launch derivatives tied to ether and SOL in the coming weeks.
Backed by the likes of Jump Crypto and Alameda Research, Hxro is looking to onboard similar trading firms deploying complex derivatives strategies as early adopters of the new decentralized derivatives. According to Hxro founder Dan Gunsberg, trading such a contract on a decentralized venue provides real-time levels of transparency and risk-mitigation that don’t exist in a centralized market.
“Even in some of the more progressive systems in the centralized world you still have a centralized point of failure,” said Gunsberg, a veteran of the derivatives market who cut his teeth trading interest rate futures on the Chicago Board of Trade. “Having a primitive layer for derivatives helps to mitigate any risk — not all risks — of a systemic event.”
Hxro announced in November the close of a $34 million funding round led by SIG FT Investments, an investing subsidiary of Susquehanna International Group. Other investors include trading firm Genesis and investment firms CoinFund and Blockchain Capital.
In addition to operating its own marketplace, Hxro has built an underpinning derivatives protocol that can serve as foundation exchange and settlement infrastructure for a wide range of applications, ranging from sports books to metaverse games to decentralized exchanges.
“Effectively anybody will be able to come and create any type of derivative product on Hxro Network’s protocol,” Gunsberg told The Block in a recent podcast recording. “The core protocol is something called ‘Dexterity,’ and the idea of it is that it’s really just the generalized architecture for the payoff function and the accounting mechanisms of a derivative.”
Decentralized derivatives make up a tiny fraction of overall crypto trading, with the decentralized exchange (DEX) to centralized exchange (CEX) trade volume ratio sitting at 1.4% in August.