The cryptocurrency trading world has come a long way, evolving rapidly from its early days. Big names like Coinbase and Binance have brought stability and innovation, yet the crypto landscape still faces significant challenges, especially in its on-chain infrastructure.
Although platforms like Uniswap have revolutionised token exchanges, a key piece is missing: advanced financial tools like futures and options. These tools are vital in traditional markets for risk management and optimising portfolios, but they’re scarce in the crypto world. This gap not only limits investors but also exposes them to higher risks.
For the decentralised Web 3.0 to thrive and support efficient capital flow, integrating advanced financial instruments is crucial. As competition for capital intensifies with advancements in other sectors like AI, the need for these tools in crypto becomes more pressing.
Efforts to introduce derivative products by platforms like the former FTX and Binance face trust issues, inefficient margin requirements, and unclear regulations. These challenges hinder the true decentralisation of blockchain and its ability to scale these capabilities.
The crypto market’s ecosystem is still developing. The growth of brokers, structured product providers, and builders is essential to move beyond speculation and create a platform that truly supports decentralised growth.
Success in DeFi protocols heavily relies on strong, efficient liquidity. Many DeFi models struggle with liquidity provision, with market makers and providers often relying on token incentives or external payments. A shift is needed to make liquidity provision profitable, focusing on elements like tick size, contract size, and transaction fee structures.
To overcome these challenges, we propose a specialised market maker program combining token rewards with adjustments to instrument sizes and transaction fees. This approach aims to attract not only designated market makers but also regular traders and scalpers, emphasising the importance of developing liquidity.
While crypto trading has advanced, the absence of vital on-chain derivative infrastructure remains a major hurdle. To fully unlock the potential of DeFi and merge it with traditional finance, we must introduce sophisticated financial instruments and foster a robust ecosystem for decentralised growth.
