How Are Token Standards Applied to Create On-Chain Financial Derivatives like Options? ⎊ Path

How Are Token Standards Applied to Create On-Chain Financial Derivatives like Options?

Token standards define the structure and behavior of the derivative contract. An options contract can be represented as an NFT (ERC-721), where the unique token ID contains the strike price, expiry, and underlying asset.

Alternatively, a standardized, fully collateralized derivative position can be represented by a fungible token (ERC-20), allowing for easy trading and integration into DeFi protocols.

How Are NFTs Used to Collateralize Loans in DeFi?

What Is a Fungible Token versus a Non-Fungible Token (NFT)?

What Is the Fundamental Difference between Fungible and Non-Fungible Tokens in a Financial Context?

How Does the Sale of ‘Fractionalized’ NFTs Complicate Their Classification?

In Options Trading, How Would a Fungible Token Option Be Settled versus a Non-Fungible Token Option?

How Does the Use of a Token Standard Simplify the Margin and Collateral Requirements for On-Chain Derivatives?

What Are ‘Synthetic Assets’ in DeFi, and Which Token Standards Are Typically Used to Create Them?

What Is the Primary Difference between Fungible and Non-Fungible Tokens in Finance?