What are Derivatives?

Derivative is a product whose value is derived from the value of one or more variable called bases. This underlying entity can be an asset, index, or interest rate, and is often simply called the underlying Derivatives are inherently secondary securities as their value is derived from the value of the primary security that they are linked to. In and of itself, traditional derivatives have no value. Example of derivatives commonly include futures contracts, forward contracts, options, swaps and warrants Derivatives are securities that derive their value from an underlying asset or benchmark. Common derivatives include futures contracts, forwards, options, and swaps. Most derivatives are not traded on exchanges and are used by institutions to hedge risk or speculate on price changes in the underlying asset.

Top Picks

Synthetix
As the leading derivatives platform in the DeFi sector, Synthetix allows for permissionless synthetic asset creation tied to the value of real-world assets.

dYdX
As a hybrid platform offering DEX, lending and leverage, dYdX is a unique provider of permissionless derivatives. Traders can use dYdX to open up a position with up to 5x leverage on Ether, with the expectation of other assets being added in the near future.

Uma
Uma is a rising protocol allowing for the permissionless creation of synthetic tokens. Unlike Synthetix, anyone can create a synthetic token which tracks whatever asset, information or index they see fit so long as there is a proper way of monitoring that information.

For your convenience, here are a list of all the derivatives platforms we’ve reviewed on DeFi Rate:

Augur
dYdX
Erasure
Opyn
Swap Rate
Synthetix
Uma