What Are Tokenized Derivatives and How Are They Enabled by Smart Contracts?

Tokenized derivatives are financial contracts, like futures or options, represented as digital tokens on a blockchain. Smart contracts encode the derivative's specific terms, such as the strike price, expiration date, and settlement logic, directly into the token's code.

This allows the derivative to be traded instantly and seamlessly on decentralized exchanges (DEXs). The tokenization process makes complex financial instruments more accessible, transparent, and divisible for investors.