What Is the Primary Benefit of Tokenizing Derivatives?
The primary benefit is increased accessibility and liquidity. Tokenization allows derivatives to be traded 24/7 on a global, permissionless blockchain, lowering barriers to entry for retail investors and enabling fractional ownership.
It also streamlines settlement through smart contracts.
Glossar
Retail Investors
Participant ⎊ Retail investors are non-professional market participants who trade securities, options, and crypto derivatives for their personal accounts, typically in smaller volumes compared to institutional entities.
Derivatives
Instrument ⎊ Derivatives are financial instruments whose value is intrinsically linked to, or "derived" from, an underlying asset, benchmark, or rate.
Lowering Barriers to Entry
Access ⎊ Lowering barriers to entry fundamentally involves democratizing access to sophisticated financial products, such as crypto options and derivatives, for a global retail audience.
Permissionless
Access ⎊ Permissionless systems, within cryptocurrency and derivatives, fundamentally alter market participation by removing centralized intermediaries dictating access criteria.
Tokenization
Abstraction ⎊ Tokenization, within cryptocurrency, options trading, and financial derivatives, represents the process of converting rights to an asset into a digital token on a blockchain.
Accessibility
Barrier ⎊ The concept of accessibility in crypto derivatives addresses the structural and procedural impediments preventing broad market participation.