Decentralized derivatives exchange Opium has introduced credit default swaps (CDS) on Tether (USDT). In this case, a sharp drop in USDT’s price from the usual $1 is used as a proxy for Tether turning out to be insolvent. So if the token fell to 70 cents, the writer of the contract would pay the buyer 30 cents at maturity. The CDS seller provides insurance through posting collateral in USD Coin (USDC), which is locked in a smart contract until maturity of the CDS contract.
Although the past months have seen an increase in attention for decentralized derivatives in DeFi, the space is still absolutely tiny compared to the traditional derivatives market and is expected to grow exponentially to the total growth of DeFi. Let’s take a closer look at some of the derivative protocols available in DeFi today. Most of the protocols available today are limited to offering options, however some protocols stand out due to novel mechanisms or advanced features. In this piece we will compare the protocols on some key facets that will help traders find their ideal protocol and investors find investment opportunities in decentralized derivatives.
SushiSwap, created by animated and anonymous character Chef Nomi, is a fork of VC-backed UniSwap, a decentralized exchange. SushiSwap promised to take all of the best features of UniSwap and improve on its governance by creating a community owned fork using a voting token called SUSHI. Anyone who joined the community could become a liquidity provider by staking SUSHI and ETH on UniSwap, which would eventually be transferred to SushiSwap when it is launched. The combination of your liquidity stake, or voting power, is your *SUSHIPOWAH*. Chef Nomi swapped his Sushi LP tokens for some $13 million of Ethereum (ETH) worth about $13 million in what bears strong resemblance to an “exit scam.”
Brendan Blumer, CEO at Block.one, the company behind the development of EOS, one of the largest platforms for building decentralized applications (dApps) claims that Ethereum is controlled by a 3 pool cartel that refuses to upgrade the scalability of the protocol, while taking billions per year in mining fees as well as $90 per transaction, and selectively reversing transactions. It’s worth noting that, last year, Block.one had to pay a $24 million fine to the US Securities and Exchange Commmission (SEC) for selling unregistered securities via its record-breaking, multi-billion dollar initial coin offering or ICO. Block.one has also been the subject of several lawsuits.
The National Payments Corp. of India (NPCI), which operates the Unified Payments Interface (UPI), plans to add near-field communication (NFC) capabilities to its payments infrastructure and is in talks with payment aggregators to push the product across point-of-sale (PoS) devices. The move is expected to expand UPI’s reach to offline merchants by tapping the PoS ecosystem and thus trigger more peer-to-merchant transactions. The NFC capability will allow UPI to take on rival private payments networks, such as Visa and Mastercard, which have been expanding their contactless payments network based on NFC over the past year through tap-on-go payment systems.
RTGS Global launched Stage One of its real-time gross settlement platform which it says could revolutionise cross-border bank payments. The platform RTGS allows commercial and central banks to settle transactions instantly, authenticating the exchange of funds and creating real-time liquidity between participants. Stage two this autumn will see RTGS Global integrate its technology as an automatic add-in to Microsoft Azure, as part of a partnership with Microsoft, and further lowering the barrier to adoption for many banks.
Users will need a secure way to hold their funds and send provably legitimate transactions. For cryptocurrency users, management of the secret keys needed for authentication has been unduly burdensome, resulting in heavy reliance on financial intermediaries. Unless central banks innovate a user-friendly secret-key-management system, CBDC users are likely to pursue the same route, potentially impeding the very financial inclusion that is a major goal of CBDC creation. Workable approaches to custody of funds and/or secret keys will be of pivotal importance in a CBDC.
Posted from Diigo: https://www.diigo.com/user/kiffmeister/Fintech