While derivatives have long been invaluable instruments in traditional finance, the market for derivatives in DeFi is still in its infancy despite the plethora of financial products and services that have sprung up. This is because L1 blockchains that currently dominate the DeFi space were not built with the intention of supporting complex programs such as sophisticated financial constructs.
As Demex is powered by a scalable layer 2 blockchain solution, this enables the exchange to support almost any financial asset from derivatives to synthetic assets without compromising security, speed or cost.
Any market (spot, derivative) can be created using any underlying asset by any individual via governance. This empowers the community in having a stake in what markets or tokens they wish to see listed or delisted on the platform.
For more information on how to list tokens and create markets on Switcheo TradeHub, follow our guides here.
Oracles are services that feed blockchains with off-chain data such as price feeds from external sources.
For Switcheo TradeHub's derivative markets, underlying price feeds can be created through oracles via governance which allows for trading of assets with USD settlement, without needing to support the actual token itself. This allows for a variety of markets such as indexes, stocks, commodities and non-digital assets to be traded via the CFD market.
Contract for Differences (CFD) markets is a financial contract that pays the differences in the settlement price between the open and closing trades.