What Is a Total Return Swap (TRS) in the Context of Digital Assets?
A TRS is an agreement where one party pays the total return of a digital asset (including price appreciation and any income) to the counterparty, in exchange for a fixed or floating payment. This allows one party to gain exposure to the asset's economic performance without owning it, which is useful for regulatory or balance sheet reasons.
Glossar
Return
Yield ⎊ Return, within cryptocurrency and derivatives, quantifies the profit or loss realized on an investment relative to its cost, often expressed as a percentage or ratio, and is fundamental to evaluating strategy performance.
Synthetic Prime Brokerage
Architecture ⎊ Synthetic Prime Brokerage, within cryptocurrency derivatives, represents a decentralized framework emulating traditional prime brokerage services, facilitating access to leveraged trading and sophisticated risk management tools without a central intermediary.
TRS
Contract ⎊ A Total Return Swap, or TRS, is a derivative contract where one party agrees to pay the total return of an underlying asset, including income and capital appreciation or depreciation, in exchange for a fixed or floating interest rate payment.
Total Return Swap
Concept ⎊ This derivative synthesizes the economic performance of an underlying asset, typically a crypto security or index, into a simple exchange of cash flows.