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How Are Tokens Used to Represent Financial Derivatives?

Tokens act as synthetic derivatives, mirroring the value and payoff of traditional financial instruments via smart contracts and oracles.
Greeks.Live16.11.25

How Are Tokens Used to Represent Financial Derivatives?

Tokens can be used to create synthetic derivatives, which are digital assets that mirror the value and payoff structure of traditional derivatives like futures or options. A smart contract locks up collateral and issues a token whose value tracks an external asset's price via an oracle.

This tokenized approach allows for fractional ownership, 24/7 trading, and collateralized lending within decentralized finance (DeFi) protocols.

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