Why Derivatives?

Crypto spot trading has seen a strong growth in its daily turnover over the past years. Now, the derivatives market is following suit. Derivatives total volume has been growing steadily to $3.6tn as of October 2021, the second-highest level recorded since November 2020.

However, the current volatile nature of the crypto markets put traditional management models at risk. This is evident from both BTC and ETH having approximately a 10% probability of having 7 day moves greater than 20%. Additionally, there is a 0.7% change that the crypto markets will move greater than 40% within a week. Such odds prove that there is a much higher risk of black swan events occurring in the crypto space then the equity space. The high volatility of the crypto markets put risk management of any exchanges at stress and constant risk of going default especially when they try to offer options and leverage. This is the problem DBOE is trying to solve through the products we deliver.