Cryptocurrency derivatives have been the center of attraction in the recent past. Cryptocurrency derivatives, including cryptocurrency futures, cryptocurrency CFDs, and cryptocurrency options) have been under the meticulous scanner of the regulators, such as, US SEC, CFTC and UK’s Financial Conduct Authority (FCA).
While one of the visions of Ethereum is to build an open financial system, one that is more efficient, fair, and globally accessible. At OpenLaw, we’re committed to this vision and have a robust set of open source tools that enable any project or user to combine to automatically execute complex agreements tied to the real world.
A key cornerstone of an open financial system is the automation of derivatives. For those not steeped in finance, a derivative a financial instrument with a value that is reliant upon, or derived from, an underlying asset or group of assets — things like commodities, interest rates, or even stocks and bonds.
The market for derivatives is massive. For example, in 2017, the notional number of outstanding derivatives contracts was approximately $542 trillion. Investors, market makers, and other financial players routinely enter into these contracts, in order to hedge risks or make a profit.
One of the most basic derivative contract is a standard call option. A call option contract gives the buyer the right to purchase an asset at a specific price — or strike price — over a specified period of time. These options can be traded over the counter (OTC) or through central clearing houses.
At OpenLaw, we’ve been fascinated with the derivatives marketplace and blockchains are rapidly maturing to the point where we can begin to automate the creation and execution of these agreements in a legally compliant and familiar way. Courtesy: consensys
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