The biggest difference between the decentralized derivatives and the centralized derivatives is that asset custody, transaction matching and asset clearing are all carried out on blockchain and realized through open source smart contracts. During the entire transaction, the private key remains in the users’ hand and the funds are not controlled by the exchange.
But for now, there are some problems with decentralized derivatives trading compared to traditional contract derivatives and the products of the centralized derivatives circuit.
Firstly, user threshold of this kind of platform is high, and it is not suitable for new users, such as non-Chinese operation interface and similar to KYC money restrictions and so on.
Secondly, as the transaction depth, compared with the depth of centralized contract derivatives, decentralized derivatives are less depth, difficult to deal with the generation of huge volume transaction; And in the process of large transactions, it is easy to appear violent price fluctuations.
In addition, most decentralized applications are currently based on Ethereum, and every operation on the chain need to consumes Gas.
Finally, in decentralized derivatives, there are also frequent attacks from hackers with prophecy and flash loaning.
All of these issues limit the development of decentralized derivatives.
Therefore, with the continuous innovation and improvement of the decentralized derivatives platform, the above mentioned disadvantages have been solved, and the decentralized derivatives have amazing explosive power.
In fact, there is already one decentralized leverage contract project — — 0xCFD.
At first, due to its launched Heco, the Gas fee of its transactions is almost negligible compared with Ethereum.
Secondly, its Hybrid Price Feeds (HPF) mechanism of on-chain Oracle and off-chain authoritative market provider and the use of NFCAMM, make the problems of predictor defect and price inaccuracy of decentralized derivatives platform can also be properly solved.
Compared to centralized exchanges and other DeFi derivatives, 0xCFD features automatic market making, external price feeds, and fixed slip points.
It is worth noting that 0xCFD provides the user with up to 200 times leverage trading, and at the same time provides the user with risk control system monitoring. When the user’s margin balance of a position is lower than the maintenance margin, it will trigger the forced liquidation of the position for the user.
Depending on above two measures, we will enable users to enjoy the benefits of high multiples contracts and also providing maximum protection for their assets.
In addition, users can also enjoy token mining in 0xCFD.
As long as the user registers and uses the contract product of 0xCFD, or uses the token for liquid mining or market making, the user can receive different amount of ZCFD token rewards.
There is a reason to believe that with more products like this, the decentralized derivatives circuit will have even greater potential.
We have a strong believer in a decentralized derivatives industry — not only because of the short-term business perspective, but also decentralized derivatives protocol can take a share of the profits from the centralized derivatives giants.
Most importantly, from the point of view of creating long-term value, the decentralized derivatives market has great potential, and it is the main part of the entire DeFi ecosystem. This will be the hardest and most difficult part of the DeFi industry to overcome and fix, but it is also the most profitable piece of the puzzle.