Derivatives
Financial instruments whose value derives from an underlying asset, including futures, options, and perpetuals.
In-Depth Explanation
Crypto derivatives let traders speculate on or hedge against price movements without holding the underlying asset. Perps are the dominant form in DeFi. Derivatives enable leverage, shorting, and complex strategies. Derivatives volume often exceeds spot volume, making them crucial for price discovery and market efficiency.
Related Terms
Perpetual Futures
PerpsFutures contracts with no expiration date that track an underlying asset's price through a funding rate mechanism.
Options
Contracts giving the right (but not obligation) to buy (call) or sell (put) an asset at a specified price before expiration.
Leverage
Using borrowed capital to amplify potential returns (and losses) on an investment position.
More in Trading & Markets
View all →Slippage
The difference between the expected price of a trade and the actual executed price.
Maximal Extractable Value
MEVValue that can be extracted by reordering, inserting, or censoring transactions within a block.
Sandwich Attack
An MEV extraction technique where an attacker places transactions before and after a victim's trade to profit from the price impact.
Frontrunning
Placing a transaction ahead of a known pending transaction to profit from the anticipated price movement.