Derivatives offered by DeFi platforms are very much in vogue right now, and it looks like the trend will continue throughout 2023.

Despite the bear market, crypto derivatives offered by DEX and DeFi platforms performed well in 2022.

In the crypto market, derivatives include all investment vehicles such as futures, options, swaps, as well as other assets that track or provide exposure to crypto assets.

A few years ago, derivatives trading was reserved exclusively for institutional investors. Today, many DEX and DeFi protocols offer these products to the general public.

In a tweet posted on Jan. 30, DeFi analyst @ViktorDefi shared his thoughts on what he calls “the crypto gold rush”:

“DEX derivatives exploded in 2022 with leading players like $GMX, $PREP, $GNS & $DYDX. Best of all, new players are emerging in 2023.

2023, the Year of Derivatives?

Crypto derivatives experienced tremendous growth during the last bull market, but according to @ViktorDefi, things have changed, “however, users are increasingly turning to derivative products offered by DEXs. This, obviously due to the fall of FTX and the need for self-care tools.”

Likewise, the derivative products offered by DEXs outperform their centralized counterparts in several respects. This includes, but is not limited to, actual returns, market risk coverage, organic growth, and capital efficiency.

Some of the best derivative DEXs include: dYdX, GMX, Gains Network, and Perpetual Protocol, among others.

According to the researcher, there are several emerging players that could help this market boom in 2023. These include Vela Exchange, which recently opened its beta version to the general public, and Perp88, a DEX that offers high leverage and free swaps.

The Dorado Exchange, Y2K Finance, NFT Perp, Logium, and Vest Exchange are also among the DeFi Platforms to Watch in 2023.

As DeFi returns, cryptocurrency traders and enthusiasts are increasingly turning to “more exotic” investments, such as derivatives.

DeFi TVL Hits Yearly High

According to DeFiLIama, decentralized finance total value locked (TVL) has increased 29% since the beginning of 2023. On January 30, the sector’s TVL reached $57.3 billion, its highest level since the beginning of November 2022.

Although the figure has fallen back to around $55.4 billion today due to the general crash in the cryptocurrency market, it is still 600% higher than it was in 2020. Therefore, the total value locked in DeFi has returned to its March 2021 bullish level.

With a TVL of $8 billion, the liquid staking platform Lido takes the largest share of the DeFi market (14.5%). MakerDAO, the issuer of the DAI stablecoin, is in second place, with a TVL of just over $7 billion. Finally, the DEX Curve occupies the third place in the ranking.

By Audy Castaneda

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