First Mover: Binance’s New DeFi Futures Let Crypto Traders Bet on Decentralization

First Mover: Binance’s New DeFi Futures Let Crypto Traders Bet on Decentralization

DeFi is hot and traders are getting a new way of indulging. (Metropolitan Museum of Art modified by CoinDesk)

The fast-growing realm of decentralized finance – semi-autonomous exchanges and lenders erected from interconnected systems of digital tokens and coding atop the Ethereum blockchain – is one of the hottest corners of the crypto industry this year, with $7 billion of value locked, a 10-fold increase over the start of 2020.  

Now, the big centralized crypto exchanges are finding a way to cash in on the mania, introducing indexes tied to the fate of “DeFi” tokens and new futures contracts and other types of derivatives. For traders, these indexes provide a way to speculate on decentralized finance without going all in on any single project.

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The latest announcement comes from Binance, the world’s largest cryptocurrency exchange. 

The company plans to offer “DeFi Index Perpetual Contracts,” listed on Binance Futures, according to a press release Wednesday. The contracts will be denominated in the dollar-linked stablecoin tether and offer traders leverage up to 50 times their money down.    

The “fully synthetic derivative product enables greater access to decentralized finance,” Binance said in the release. 

Ahem. Never underestimate crypto exchanges’ creativity when it comes to adapting Wall Street-style financial engineering for use on the so-called digital rails. 

Binance’s new contracts might be an early entrant in what could potentially become a crowded field.

Earlier this week, the exchange FTX announced a futures index tracking the . FTX had . 

“We’ve seen large demand from customers to get exposure to a broad base of DeFi products,” CEO Sam Bankman-Fried told CoinDesk’s Zack Voell in a private message.

Binance’s DeFi index consists of 10 tokens associated with DeFi, several of which rank among the year’s best performers. They include  , , , ,  and . 

In an example of the speculative fervor, tokens associated with the phenomenon now have a combined market value of $12.7 billion, more than the amount of money locked into the underlying platforms, according to the website .

“DeFi is still the big hype, with many coins still flying high,” the Norwegian cryptocurrency analysis firm  wrote Tuesday in a weekly report.

Messari, a crypto-markets research firm, has compiled its own list of 30 tokens associated with DeFi. On average, they’re up 13-fold in 2020.

It almost makes bitcoin’s 56% year-to-date gain look like dead money.  

Bitcoin’s latest price drop has a silver lining: It has forced out weak hands in the derivatives market and potentially opened the doors for a more sustainable rally to recent highs. 

Read more: 

– Omkar Godbole

Aave (LEND): Decentralized lender passes MakerDAO to become  (CoinDesk)

Wrapped bitcoin (WBTC): Fees on Ethereum blockchain are so elevated that BitGo is scouting for . (CoinDesk) 

(ETH): More than $1 billion of ERC-20 tokens vulnerable to “.” (CoinDesk)  

PAX Gold (PAXG): Crypto exchange  as precious metal trades around $1,900 an ounce. (Paxos)

FTX has acquired Blockfolio, the mobile news and portfolio tracking app, for $150 million.

Pressure plaguing the Ethereum blockchain might prompt BitGo to build a sidechain to sidestep exorbitant fees.

LastBit’s hope is to allow users to harness the Lightning network to pay for just about anything.

One of the largest crypto exchanges in Japan is supporting the launch of the country’s first initial exchange offering.

– Sebastian Sinclair

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