The cryptocurrency derivatives market has become even more popular than the spot market, reflecting the boom in derivatives trading. According to data tracker CryptoCompare, more crypto derivatives were traded than actual coins in July. That’s the second consecutive month when derivatives clocked more trading volume than the spot market.
While the spot trading volumes stood at $1.9 trillion in July, the derivatives trading volume was a little over $2.5 trillion. More than $100 billion worth of derivatives contracts is traded on a busy day, according to the Carnegie Mellon University’s CyLab. It rivals the daily trading volume of the New York Stock Exchange.
Where There are Transactions, There are Disputes
Crypto traders use derivatives to hedge their bets, speculate on price movements, and magnify rewards in a highly volatile market. For the uninitiated, derivatives are contracts between two or more parties based on the future price of an underlying asset.
Trading on derivatives exchanges is a high-risk endeavor. Traders can use leverage to make much larger bets than they can cover with the funds in their accounts. It could amplify your gains, but could also wipe you out.
That’s not the only risk traders face, though. Amid the boom in crypto derivatives trading, derivatives contract disputes have become more frequent. Lack of regulations and legal assurance makes it difficult for the parties involved to resolve contract disputes.
The fact that, unlike in traditional currency markets, someone can trade on crypto derivatives platforms with just an email address and some cash makes the situation even more complicated when disputes arise. Institutional traders are often hesitant to trade a market without dispute resolution or legal assurance because the stakes are often high for them.
Resolving the Derivative Contract Disputes
Bringing trust and transparency into the ecosystem could give the derivatives market a further boost. Astra Protocol aims to equip the crypto derivatives ecosystem with a complete legal layer to remove doubts, eliminate fraud, and deal with disputes transparently.
Astra Protocol adds a legal assurance layer to smart contracts to provide an on-chain dispute management service. It requires both parties to agree to use Astra before a transaction is executed, making it the default mechanism to resolve all potential disputes. The protocol uses a blend of human expertise and technology to provide assurance and security to all transactions.
If there is a dispute or either party is dissatisfied, they can invoke Astra, share their side of the story, and provide evidence. Astra steps in to resolve the disputes quickly, efficiently, and cost-effectively. It enables individuals as well as institutions to trade crypto derivatives with confidence.
The crypto derivatives market has become larger than the spot market. With that, there has been a rise in the number of derivative contract disputes. Challenges faced by DeFi traders need unique solutions. Astra Protocol brings safety and transparency to contracts, safeguarding investors’ assets. Every DeFi platform needs an effective dispute resolution mechanism, which is what Astra brings to the table.