Synthetix Exchange May Soon Offer Derivatives Trading on Ethereum

Ethereum-based synthetic asset issuance platform Synthetix is adding new features, which includes derivatives trading.

In a March 10 blog post, Synthetix announced plans for trading in binary options in the third quarter of this year. Binary options are a type of derivative financial product where the buyer either receives a payout or loses their investment.

“Synthetic binary options will likely generate significant trading volume as they will be able to leverage the liquidity of the debt pool, allowing a trader to take a large position almost immediately without needing to find a counterparty.”

In addition, the non-custodial crypto exchange listed several improvements to its existing products, including the “launch of sX v2, new crypto Synths and crypto index tokens.”

New features include leveraged and futures trading

For its second quarter, Synthetix is supporting new assets like “equities and exchange-traded funds.” The exchange is planning to offer leveraged trading on tokens.

“Leveraged trading drives a significant amount of volume on crypto exchanges, and while synthetic futures will compete directly with centralised futures platforms, there is a lot of value in supporting tokenized leverage. We will initially test leveraged tokens using fiat currencies like the Euro and AUD. We expect to support 5x and 10x BTC tokens both long and short soon after we launch fiat leverage tokens. Following the rollout of BTC we will expand the offering to other large cap crypto tokens.”

The Ethereum-based platform revealed its plans for several features in 2020, including optimistic rollups, Ether/DAI/BTC collateral, trading incentives, advanced order types, and synthetic futures. For these futures, Synthetix said it would support any asset:

“Synthetic futures trading will be much more flexible and will support any asset on sX. This opens up the possibility for leveraged trading on many different asset classes simultaneously, including cryptoassets, equities, and commodities. We expect leverage will initially be capped at 10-20x…”

Crypto exchanges considering binary options

Synthetix isn’t the only crypto exchange seeing the potential of offering derivatives trading. Even before the Supreme Court of India lifted a ban on banks dealing with crypto, the Unocoin exchange was planning to launch derivatives options on its platform.