What are Decentralized Derivatives?

📊Decentralized derivatives and lending platforms are the most popular use case for Decentralized finance or DeFi today.

📈Decentralized derivatives work almost the same way as traditional derivatives, but the difference is that it does not require a broker. Rather, the terms of the contract can be created into smart contracts, removing the need for a third party. Settlement automatically carries on-chain when the terms of the contract are fulfilled. The flexibility of decentralized derivatives is expansive, allowing users to make instruments on virtually any underlying asset.

👨‍💼According to DeFi Pulse, decentralized derivatives account for around 18% of the total value locked in DeFi. It’s the second most popular category of DeFi dApp after lending.

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