Creation of Decentralized Non-Crypto Financial Markets
Bitcoin is a great solution to remove intermediaries but it doesn’t support the creation of a full financial system. The reason why cryptocurrencies are being traded mostly in centralized exchanges is because decentralized finance(DeFi) doesn’t have a robust enough ecosystem (option chains, physically-settled cross-chain futures, etc).
The massive growth in DeFi is focused on lending which is no doubt a great accelerator to driving liquidity in decentralized exchanges. However, to create stable and expansive decentralized markets, derivatives trading not limited to crypto-assets also seems vital.
Nasdaq reported ‘total crypto derivatives trading on exchanges topped $3 trillion in 2019 with an average daily trading volume of about $8.5 billion’ in early March 2020.
This is an indisputable indicator that users are interested in trading in crypto-derivative markets. However, there is still no decentralized platform that offers diversified derivatives markets like in traditional finance.
Decentralized derivatives trading in DeFi is still a small market dominated by a few players offering unique yet isolated products.
So the question is how can a DEX structure a platform for sophisticated financial instruments not limited to crypto-assets to meet users’ appetite for risk and what would be the driving force to adoption of decentralized derivatives trading?
If markets are easy to create by anyone, would it be a strong enough attraction for traders and other market participants?
Would the restrictions imposed by regulators to centralized exchanges be sufficient to drive traders to use decentralized exchanges?
This is an old post, but it is still an interesting topic at the moment!
If we look at binance for example. 3-4 years ago they had developed a nice exchange. Trading crypto was (fairly) easy and the basic stuff was there.
If we look at the current stage of binance, it's a whole different experience. They worked their butt of, and it payed of. I think this is the way for mainstream adoption. Don't ever think your product is 'enough'. You need to offer the customer as much as possible. This is what binance did and it payed off big time for them.
The same is applicable to demex. It is a nice start for sure, and the tech is amazing, but a lot more needs to be added to attain more adoption. I bet the team has a solid roadmap for this!
@menno-v "Kill your own product, before competition does".
Competition is always looking at you, and right around the corner. Trying to get your part of the market. Sometimes with new features, sometimes with agressive marketing, sometimes law-suits (Boeing-Airbus). Looking at the Crypto-Industry I think most competition is from innovation (development) and new entrees to the market. I sometime wish there was a huge floorspace filled with Demex-dedicated Dev's, Marketing & Commuication employees, and Demex-Enterpreneurs, and so on to meet our needs before competition does. That's not possible, so we need to find an other way. And I think that is trough strategic collaborations. Getting others to join forces, bring their businesses to TradeHub, combine Dev-power. Anyone want to share his/her thoughts?