Why Might a Pool Operator Prefer an Over-the-Counter (OTC) Derivative Contract over an Exchange-Traded One?
A pool operator might prefer an OTC derivative because it allows for customization of the contract's terms, such as the size, expiration date, and specific underlying asset, to perfectly match the pool's unique expected production schedule and risk profile. OTC contracts also offer greater privacy, as the transaction details are not publicly visible on an exchange, though they carry higher counterparty risk.
Glossar
OTC Derivative
Contract ⎊ An OTC derivative is a customized financial contract negotiated directly between two counterparties, bypassing traditional exchanges.
Over-The-Counter (OTC)
Structure ⎊ This describes trading conducted directly between two parties without going through a centralized exchange order book, typical for large-volume crypto derivatives.
Pool Operator
Function ⎊ The pool operator is the centralized entity responsible for coordinating the collective computational power of individual miners within a mining pool to increase the probability of discovering a block.