Market Research and Financial Function Analysis Report on Centralized Cryptocurrency Exchange Derivatives

Abstract
There is a general consensus among people that cryptocurrency can be used as a new tool for investment. Spot trading may not suffice to meet the needs of investors. They have been keen on the derivatives market due to the leverage effect. Considering the availability of data, this paper researches the status quo and the competitive landscape of centralized cryptocurrency exchanges’ derivatives market, analyzes the innovative features of crypto asset derivatives compared with conventional derivatives, and discusses whether they are conventional derivatives. In the end, this paper will illustrate the innovative concepts about product design and speak to the potential of the cryptocurrency derivatives market.


Summary
◆ Cryptocurrency derivatives are mainly provided by CEX’s and DEX’s. CEX’s include comprehensive cryptocurrency exchanges, cryptocurrency derivatives exchanges and conventional compliance exchanges. Market participants consist of common investors and institutional investors.

◆ There is a strong momentum of growth in the cryptocurrency derivatives market, with the ratio of high and low peaks being hit 87 times in the past year. The three major comprehensive exchanges account for 80% of the market share; and there is an increase in the preference for cryptocurrency derivatives. Exchange users’ contract preference is growing in a similar way. The overall trading volume of derivatives is 4 times that of spot.

◆ Cryptocurrency futures have the functions of price discovery, hedging, and market stabilization, etc. The reason why cryptocurrency exchanges are more efficient in terms of price discovery and stabilizing the market may lie in the low threshold and the high liquidity. There is greater chance of arbitrage in compliance exchanges.

◆ There is lots of speculation involved with cryptocurrency exchanges, in contrast to the less speculation in derivatives exchanges and compliance exchanges;

◆ When compared with conventional futures, there are innovations involved with crypto futures contract trading in terms of the delivery methods, the margin types, and risk management. Perpetual contracts offer new investment ideas. Normal and inverse contracts differ in earnings under various market conditions. Isolated Margin vs Cross Margin meet different needs of investors in terms of risk management.

◆ Cryptoasset derivatives have been upgraded continuously. The services offered through volatility contracts and perpetual options are being improved. Products that meet the needs of the cryptocurrency market have been emerging, which could address some of the current problems with the conventional derivatives market.

◆ Taking the development of the conventional financial market into consideration, the crypto-option market is expected to grow 80 times in size; There won’t be monopolies for futures. In order to stabilize the market, exchanges must comply with laws and regulations. When it comes to options, innovation is the solution to breaking the power of monopolies.


1 Review of the Cryptocurrency Derivatives Market
1.1 The Main Supplier of the Cryptocurrency Derivatives Market
In 2020, "DeFi Summer" awakened the cryptocurrency market, which had been dormant for more than a year. The price of Bitcoin broke the threshold of $10,000 again, and the cryptocurrency investment rush began. The spot market tends to be the first choice for investors when participating in the cryptocurrency market. And it has become evident that investors have a growing demand on financial derivatives. The development of financial derivatives is an inexorable trend of cryptocurrency finance.

In the field of cryptocurrency, CEX’s (centralized exchanges) and DEX’s (decentralized exchanges) or certain protocols are the main suppliers of derivatives. Exchanges provide corresponding services to that of centralized finance, including Binance, Gate.io and other comprehensive exchanges.There are also exchanges, such as FTX, Bybit, that focus on developing derivatives. Regulated conventional exchanges, like CME, also provide market investors with investment access to cryptocurrency futures1. According to the derivatives categories, decentralized finance can be generally divided into futures (including perpetual contracts), options, synthetic assets, prediction markets, interest rate swaps. Due to the features of decentralization, projects that provide derivative products through smart contracts or protocols are also involved.


In the conventional financial field, the derivatives market has the absolute advantage over the spot market in terms of trading scale. The derivatives market is nearly 5 times that of the latter. With the development of the cryptocurrency derivatives industry as well as the shift in investors’ preference for investment tools, the market for centralized exchange derivatives is becoming similar to that of the conventional financial world, with nearly a 80% market share. Therefore, in this report, the derivatives market of centralized exchanges is the main subject of research.

1.2 Cryptocurrency Derivatives Demand

1.2.1 Common Investors and Institutional Investors
In terms of capital volume and risk tolerance, investors involved in cryptocurrency derivatives trading can be divided into common investors and institutional investors. Bitcoin is a case in point. During the initial phase, the cryptocurrency trading market was made up of a small group of players who had technical knowledge and vision.

With the development of decentralized technology and rising consensus on cryptocurrency, it gradually appealed to more and more users in terms of trading. Besides, the emergence and development of cryptocurrency exchanges promotes investment behavior for common investors. Cryptocurrency exchanges offer tempting services, such as token listings, setting a proper trading fund threshold, and improving the user interface for trading software. Investors' positive expectations for the development of this new industry and considerable profit in the token economy is a huge factor in terms of demand. The increasing demand for leveraged investments, futures, options and other derivatives is clear to see.
As far as institutional investors are concerned, cryptocurrency has been regarded as an acceptable investment tool. Some of the reasons for the growing interest in cryptocurrency trading include: the limited application of high-quality assets in the conventional market, the downturn in the global economy, and the demand for a different variety of investment. On the other hand, the trading of cryptocurrency is still under strict regulation in many countries. The risk of regulatory scrutiny and capital safety have become the biggest constraints for institutions in cryptocurrency trading. However, the ice was broken in 2017. CBOE took the lead in launching Bitcoin futures in December, 2017 (which stopped in 2019). The CME also launched BTC options a week later in early 2020. With futures, the risk and cost of BTC spot holding can be avoided. The compliance of trading venues gives institutions more confidence to participate in cryptocurrency trading. The CME, as the world's largest derivatives exchange, offers a minimum contract unit of 5BTC for BTC Futures and a minimum of 0.1 BTC for MicroBTCFutures. But even so, the threshold for such futures contracts remains high. Institutional participants account for more than 70% (generally including dealers, asset management institutions, leveraged funds and large position holdings).

1.2.2 Hedges, Arbitrageur, Speculator
Participants in the cryptocurrency derivatives market are still futures investors. They may buy or sell, depending on their personal preference. The price of futures takes shape throughout the trading process. The participants in the futures market consist of hedgers, arbitrageurs and speculators.

■ Hedgers
The purpose of futures investment is to carry out short or long hedging positions of the spot asset. This is to avoid drastic change in profits or costs caused by price fluctuations. Fundamentally, hedging is defensive behavior, which is divided into selling and buying. The former refers to investors who hold spot and worry about price decline, while the latter refers to investors who are willing to buy and are concerned about the price rise.

In conventional finance, most of the participants are commercial enterprises, such as manufacturers, processors and traders. In the cryptocurrency market, this kind of trading tends to be suitable for miners who hedge to stabilize their returns through futures contracts.

■ Arbitrageurs
These investors engage in low-risk speculation. They hold both long and short positions and make profits by seeking price differences among various markets and contracts. Both basis and spread offer them opportunities to make profit. Arbitrage can be divided into futures-spot arbitrage, calendar spread arbitrage, cross-market arbitrage and cross-currency arbitrage. Cash arbitrage includes normal futures-spot arbitrage and inverse futures-spot arbitrage. When the basis (spot price - futures price) is negative and the absolute value of the basis is more than the holding cost, normal futures-spot arbitrage can be carried out. This is when the investor sells the futures contract with an equivalent amount when buying or holding the spot, and then sells the spot and ends the futures position when the price converges. When the basis is positive and the absolute value of the basis is more than the holding cost, inverse futures and spot arbitrage can be carried out, that is, to construct spot short position and futures long position. Calendar spread arbitrage is to make profit by taking advantage of the discrepancies in the extrinsic value across two different expiration contracts, of the same token. This trading strategy is favored by institutional investors who utilize the cryptocurrency derivatives market.

■ Speculators
A speculator is an investor who buys and sells contracts in the futures market, making a profit by longing in the bullish market and shorting in the bearish market. This kind of trading relies on investors' judgment of the trend to estimate future prices so as to decide whether to take a long or short position. With the function of leverage, investors are willing to take the risk of hedging in order to make profit in the spread. And the majority of common investors in the current cryptocurrency derivatives market follow this speculative logic.


1.3 The Momentum of Growth in the Cryptocurrency Derivatives Market
As far as investors are concerned, contract trading has become an attractive of investment as it often gives a better sense of where the market is headed. Statistics show that there is rapid growth in the trading volume of derivatives in the past year. This has been led by comprehensive crypto-exchanges, such as Binance, OKEx, Huobi and Gate.io, as well as derivatives exchanges, such as FTX, Bybit, Deribit and BitMEX. The total volume of derivatives trading reached its peak at 570 billion dollars, nearly 87 times that of the low, while the total volume of the top five spot trading exchanges during the same term reached 190 billion dollars, 65 times that of the low peak.


In terms of the total market share, Binance occupies half of the market. Binance, OKEx and Huobi account for 80% of the market trading volume, and Gate.io has seen remarkable growth; The previously occupied space in the market for BitMEX has been squeezed, while other derivatives exchanges have a more stable market share.


1.4 The Increase in the Preference for Cryptocurrency Derivatives and the Contract Preference of Exchange Users
There are great distinctions between exchanges in the ratio of derivatives trading volume to spot trading volume. As the market is getting bullish, exchanges’ derivatives and their patterns of spot trading volumes are similar.

Comprehensive exchanges have an increasing market share in derivatives, while the derivatives exchanges have seen a significant drop. The derivatives market gradually converges to approximately 4 times the scale of the spot market, which proves that the overall contract preference of exchange investors tends to be similar.

2 Analysis of the Cryptocurrency Futures Market
In the cryptocurrency derivatives market, there are other types of products such as options, volatility products, prediction products, in addition to futures contracts. At present, the futures market is booming. Therefore, this section mainly discusses the functional value and investment logic pertinent to cryptocurrency futures.


2.1 Analysis of the Functions of Cryptocurrency Futures
In conventional finance, the main point of focus is on the futures market. This involves the functional theory and pricing mechanism associated with futures trading. It is generally believed that futures have the functions of price discovery, hedging and market stabilization in addition to offering a wide range of investment choices. Whether these functions are still working in the field of cryptocurrency derivatives needs consideration. The current centralized cryptocurrency exchanges have not announced the details of the design yet. This section will skip the discussion of the pricing mechanism.


2.1.1 The Function of Price Discovery
Price discovery is deemed as the primary function of futures, which is an essential foundation to fulfil other functions. It refers to the process of seeking an equivalent price in one or more markets. Cryptocurrency futures are more efficient in terms of price discovery due to the advantages of lower trading costs, higher capital leverage, convenient long and short trading and high liquidity. Futures market prices can reflect the predictions of the market trend. As various information in the market can be reflected in the futures market, spot price is similar to the futures price and usually returns to a reasonable range.

Martin and Garcia (1981) said that futures price is an unbiased estimate of the spot price in the future, while Chen Rong and Zheng Zhenlong (2008) take the view that futures’ price discovery function lies in the guiding relationship between futures price and spot price of the same period. Xiao Hui and Liu Wencai (2006) believes that the performance of price discovery functions is restricted by such factors. When the market scales, the proportion of speculation,hedging, and the trading mechanism increases. The larger the market scale is, the more speculators there are. The information in the market can be sufficiently reflected in the market price during this time. As a result, the function of price discovery can be fulfilled to its fullest. According to the statistics, the BTC Futures price of the major cryptocurrency exchanges is basically in line with the trend of spot prices. This is the leading effect of futures on spot prices. The conventional CME exchange may be restricted by the high threshold of 5 BTC minimum units per contract, the trading frequency and the number of users may not compete with the cryptocurrency exchange. In spite of the large market scale, there is a limited efficiency in the liquidity. As a result, there is a lack of flexibility in price change. This still does not affect its market influence in the normative investment of cryptocurrencies.


2.1.2 The Function of Hedging
Hedging is to offset potential losses in the futures market. For hedgers, the price differences between spot and futures, is what determines if they make a loss or a gain. As is mentioned above, hedging is divided into a buying hedge and a selling hedge. When the basis is a positive number, it will benefit the selling hedgers, but when it is a negative number, buying hedgers can make a profit.

A hedge, in a simple way, is to offset the risk of any adverse price movements by using financial instruments in both futures and spot markets. If there are price differences between futures and spot, the risks involved make hedging less favorable. The theory of selective hedging is based on the maximization of earnings. Hedging is carried out when there is change in the expected basis. When the basis risk is taken in the market, the risk involved with the spot market can be reduced. This hedging method relies on investors' judgment of basis change, which has a certain degree of speculation to it. Some scholars refer to Markowitz’s modern portfolio theory and propose the diversification of portfolio investment between spot and futures. The optimal risk-earning ratio can be decided by measuring the risk level, so as to determine the position size of both.


2.1.3 The Function of Market Stabilization
Futures provide investors a tool of hedging and can be used as an asset allocation tool. It also has the function of stabilizing the market. When unexpected events occur in the market, resulting in a sharp rise or fall, futures can relieve the pressure of buying and selling in the spot market. To some extent, it expands the market positioning, extends the depth and breadth of the market, and alleviates the risk of market volatility.

Cai Xianghui (2010) proposed that futures are the source function of stabilizing markets from five mechanisms: Risk-avoiding mechanism of hedging, price suppression mechanism, price hint mechanism, stable expectation mechanism and liquidity provision mechanism. Futures trading adopts a margin system. Low-cost shorting creates a high rate of capital utilization and increases market liquidity. When there is an unreasonable rise in the spot market, it is convenient to short the market. Therefore, the efficiency of information can be improved and the price correction ability is reflected. However, when there is no shorting tool or the cost of shorting is high, asset prices only reflect the expectation of a rising price. The increasing degree of asset bubbles brings risks to the stability of the market.

The arbitrage mechanism also plays a role in stabilizing the market. Futures-spot arbitrage and calendar spread arbitrage can correct pricing errors and prevent excessive fluctuations in the spot market. And the basis is an important reflection of asset price fluctuations in the future. Investors carry out arbitrage trading on the premise of basis convergence to effectively avoid excessive expansion of the gap between futures and spot and enhance market stability. According to the data of basis rate2, cryptocurrency exchanges mainly provide BTC perpetual contracts, of which the basis rate is pretty low. The monthly contract launched by CME has a large variation in the basis rate. From the perspective of the basis arbitrage profit maximization, monthly contracts or quarterly contracts have larger space for arbitrage than perpetual contracts.


2.2 Analysis of the Speculation of Cryptocurrency Futures
In terms of the conventional financial market, speculation and hedging are closely associated with the futures market, where hedging has a dominant position and speculation works for hedging. Futures speculation has the function of taking price risks, increasing market liquidity and correcting price deviation. The emergence of speculation is conducive to the mature development of the futures market. As the lack of speculation will reduce market liquidity, hedging is hard to implement. It is difficult to avoid price risk in the futures market; If there is too much speculation, which exceeds the need of hedging, excessive speculation will occur. As a result, the stability of the futures market will be sabotaged, and there will be higher trading risks and hedging trading costs. Therefore, the measurement of speculation is of great significance to the futures market.

According to current statistics, the ratio of total derivatives trading volume to open interest can be an indicator for the measurement of speculation. The derivatives of comprehensive cryptocurrency exchanges, such as Binance, have a higher chance of speculation than that of derivative cryptocurrency exchanges. The chance of speculation at Binance is much higher than that of other exchanges, whose speculative degree fluctuates in the range [8,12]. Huobi, OKEx and Gate.io are relatively similar, within the range [4,6]. Derivative cryptocurrency exchanges fluctuate in [1,4], and CME is around 1. Therefore, it can be inferred that there are more speculative activities in cryptocurrency exchanges.

3 The Features and Categories of Cryptoasset Futures Contracts
Futures contracts are financial derivatives targeting different underlying assets. They were originally used to hedge market trading risk but have been widely applied for speculative trading, especially in the cryptocurrency markets. Futures contracts consist of five key elements: Buyers and sellers, price, delivery date, trading quantity and commodity, which all have the following features:
At present, Bitcoin futures and Ethereum futures are the main categories of contracts in the cryptocurrency market. The futures categories are still at the preliminary stage. But compared with conventional futures, there is more innovation. Cryptocurrency asset futures are categorized differently:

3.1 Delivery Contracts and Perpetual Contracts

A delivery contract is the most common type of futures product in the conventional futures market. This is when both parties agree to deliver the contract at the agreed price and quantity sometime in the future. In the BTC delivery contract market, there are weekly, monthly and quarterly contracts.


A perpetual contract is a special type of futures contract which has no delivery date and allows investors to hold a position indefinitely. It is similar to spot trading. The marked price is based on the weighted price of the external market, which is used to determine the forced liquidation of positions to prevent malicious market manipulation and reduce the risk of "pin insertion". The capital fee mechanism also acts as an anchor to the spot price. The capital fee = position value * capital rate. When the capital fee rate is positive, the longs pay the shorts, and when the fund rate is negative, the shorts pay the longs. Perpetual contracts usually adopt multiple mechanisms to reduce market risks, such as limiting the number of positions held or increasing the proportion of margin to increase the risk limit. They often take the balance generated by forced position liquidation as insurance. Select investors with the highest returns from those holding reverse positions take advantage of complete forced liquidation.


3.2 Forward Contract and Inverse Contract
Common perpetual contracts include a forward contract (USDT margin contract) and an inverse contract (currency standard margin contract). Take BTC perpetual futures as an example:

Due to distinct market tendency, there are different contracts returns. Generally speaking, long inverse contracts can increase earnings when there is an upward tendency in the market, and short forward contracts can increase the returns when the market moves downward. Inverse contracts are more suitable for the currency-oriented investors and forward contracts are for investors focusing on legal tender.

3.3 Cash Delivery and Physical Delivery
Cash settlement means the settlement price is used to calculate the profit and loss of thenon-closed position contract. The payment in cash is made when the close of the futures contract is delivered at the end of the term. The process of settlement is fast and convenient, which is currently the main delivery method of cryptocurrency exchanges.

Physical delivery means that both sides exchange assets and transfer asset ownership on the delivery day in accordance with the regulations of the futures contracts, which can be combined with the spot position to make a better investment strategy. In this way, it can sufficiently reflect the fundamentals of supply and demand in the spot market, but there is a high threshold for physical delivery entry. Normally miners and professional institutions will adopt this method.


3.4 Isolated Mode and Cross Mode
In the cross mode, all assets in the contract account will be used as margin, and if any other positions have gained earnings, margin can be added to the loss of the position. Forced liquidation will result in the loss of all assets in the contract account. The advantages of full-position mode: There is lower risk of forced liquidation, lower initial margin occupancy rate, and flexible position adjustment. When the currency price fluctuates slightly, the contract position will not be affected. There is lower risk of forced liquidation and there is a high capital utilization rate of the contract account. When currency prices fluctuate dramatically, users who are liquidated will suffer heavy losses.

In the isolated mode, the biggest loss of a position is the margin and supplementary margin, which is equivalent to isolating each position. When the fluctuation in the currency price leads to forced liquidation, users will just lose the margin of isolated positions. The margin of other positions won’t be affected. But in the situation where all margins are occupied, it is harder to adjust the positions.


4 Other Innovations of Cryptoasset Derivatives
4.1 Volatility Contracts
Investors have been concerned with the volatility in the cryptocurrency price, which can sometimes be an issue for them, but the volatility is also the lure for more and more risk-taking investors to participate in trading. As conventional financial market has a mature level of development, there is research to suggest that factors affecting asset prices and a variety of investment strategies are central bank macro policy, the association between stock market and bond market, the supply and demand structure of periodic products, and the method of valuation and analysis on individual stocks and companies. With the expected development of the cryptocurrency market for decades to come, the consensus that cryptocurrency serves as an asset allocation tool still needs to be improved upon. The operation logic of token economy and the evaluation of tokens haven’t been made clear, so the instability of currency value has become the norm.

Taking BTC options as an example: Most BTC options refer to the conventional option pricing formula known as Black-Scholes Model. The implied volatility is an important indicator to measure the value of options. Among the option products in various industries published by CME, the volatility of agriculture and energy is around 30%, and the equity and foreign exchange options are only below 20%. The volatility of BTC options is more than 80%, which is far above other industries. According to the statistics of Skew, the volatility of BTC options fluctuated around 100% in the past year, and the highest was over 180%.


Given the high volatility of cryptoassets, some exchanges have come up with new ideas on product design, such as FTX's Move contract. A Move contract represents the absolute value of the product's movement over a period of time. For example, if the daily price of BTC changes by $100 from the beginning to the end of the day, the BTC-Move contract will expire at $125 regardless of the surge up or down of BTC. Long Move contracts indicate the prediction of large price fluctuations, while short contracts indicate an expectation of a more stable market trend. Unlike conventional investment strategies that bet on the rise or fall in asset price in the future, these products are based on volatility rate. They reduce the risk of asset prices rising or falling unilaterally due to market shocks, and provide a choice for investment that is more in line with the characteristics of cryptocurrency markets. In addition, BVOL products combine FTX Move contracts and BTC perpetual contracts to provide investment exposure with implied volatility. The investment logic is in line with the judgment of future market price stability.


4.2 Perpetual Futures Product
In the cryptocurrency derivatives market for centralized exchanges, the trading volume of perpetual futures occupies most of the market. The perpetual options are still under conception and exploration. Conventional options have a good effect on hedging downside risk, but most of the centralized exchange options belong to the European style of options, which have a clear delivery date. Its delivery flexibility can’t compete with that of American options. There is some risk of position movement and liquidity fragmentation. In terms of these problems associated with conventional options, decentralized on-chain options provide an innovative approach.

Taking partially decentralized options as an example, Opyn, established as part of Convexity Protocol, allows users to create put and call options. Hegic uses a universal liquidity pool that generates passive income to make it simpler to do P2P option trading. Charm introduced the prediction market AMM to create liquidity. Asteria is the first to use dynamic hedging mechanisms on-chain to guarantee stable returns for market makers.

Everlasting Options recently launched by Deri Protocol is noteworthy. It is unique in that it offers a hedge against downside risk and ensures profit, while having no expiration date and no need to move positions. Everlasting Options adopts a working mechanism based on capital rate. As for the call option, the part that “mark” is higher than “strike” is called a payoff. The option buying side can maintain the position and pay in installments as long as he keeps paying off the “mark-payoff”, while the selling side can charge the “mark-payoff”. Of course, sufficient margin is needed to support the payoff that may be made. Simply speaking, it is similar to the buying side paying for insurance, while the selling side charges the insurance fees.
In terms of the pricing mechanism, most option products in the market use the BS model, but Everlasting Options offers a more concise pricing formula by combining the BS model with the Everlasting Option pricing formula proposed by Dave White and Sam Bankman-Fried.


When it comes to addressing specific problems of liquidity fragmentation, the traditional Orderbook method can solve this problem to a certain extent, but won’t eliminate the issue. The AMM liquidity pool method can achieve zero liquidity fragmentation. Put/Call options and different exercise prices can be placed in the same liquidity pool to maximize capital efficiency. Everlasting Options employs the PMM mechanism (Proactive Market Making, a special AMM scheme), where an Oracle price guides the discovery process of the option price.


5 The Prospect of the Cryptoasset Derivatives Market
5.1 The Cryptoasset Options Market Is Expected to Grow 80 Times its Current Size
At present, the cryptoasset derivatives trading market is mainly dominated by centralized exchanges who provide mature products in their initial stage, such as perpetual futures and European options. In contrast, innovative products emerge endlessly in the decentralized derivatives market, and it may be difficult to fundamentally change the nature of centralization. But based on the nature of open-source, on-chain innovation, these emerging products can provide a rich source of inspiration for design.
Given the development of the cryptoasset derivatives market, the author believes that cryptocurrency options will flourish in the future. According to the statistics on derivatives from global financial exchanges compiled by FIA, options in the conventional derivatives market account for 80% of futures trading volume on average. The current data from Skew show that the value is only 1% in the cryptocurrency derivatives market (futures average value 500b, options average value 5b). In other words, the options market for cryptocurrency derivatives has the potential to grow by 80x if it were to meet the valuation currently seen in the traditional derivatives market. Due to the high threshold, complicated trading methods and high demand for hedging, the participants of the traditional options market are mainly the large institutions or manufacturing enterprises. Considering the ease in which cryptocurrency can be traded together with its speculative value and interest from common investors, the market is expected to continue to grow which is favorable for options.

5.2 Multiple Cryptocurrency Exchanges Emerge in the Derivatives Market
According to the trading volume of major BTC Futures and options exchanges in Section 5.1, the futures market presents a landscape for many major comprehensive cryptocurrency exchanges. The current derivatives cryptocurrency exchanges in the option market have a relatively equal share. There is not “one superpower” who holds an overwhelming portion of market share. When it comes to the futures market, mature financial tools for futures and the brand attraction of major exchanges have an influence on the status quo. In addition, there is no remarkable breakthrough in terms of innovation when it comes to futures and the investment methods that go with it. The prospective competition of futures relies on platform strength and popularity. With the increasing awareness of cryptocurrency as a new investment tool, financial institutions will show increasing willingness to participate. As a result, trading platforms with security, compliance and credible strength can become their trading choice.
Unlike the futures contract market, it is believed that innovation will be the leading denominator for competition amongst major exchanges in the options market. The current situation where minority exchanges monopolize the market can be changed. There is still great space for the development of option products. The existing products in the market are BTC options and ETH options in relatively simple forms. Currently, the cryptocurrency option market is still a blue ocean, and there is a large demand for derivatives tools that are compatible with the features offered within the industry. Therefore, advanced design mechanisms and user-friendly trading operations will be favored by investors. Conventional financial institutions and currency institutions continue to enter the options market and launch customized options products to meet the needs of investors, which will drive the innovation and maturity of options market.


Statement
To issue this research report, we hereby make the following statements:
■ This report is a conclusion drawn by internal members with all due effort of survey and objective analysis, aiming at conducting research and analysis on the blockchain industry, which cannot completely predict the impact on price of tokens in relevant projects.
■ This report is not a tool to measure the value of the research object or the value of tokens issued by relevant projects, and the sole basis for investors to make their final investment decision.
■ All the materials of the projects in this report are sourced from reliable and accurate internal channels. Due to artificial or mechanical errors, information prevails when it is acquired in the first place. Internal members have verified the authenticity and accuracy of all the materials, but won’t make any explicit or implicit statement or guarantee.