This is a chapter from the Token Economy book series. All subchapters are collapsed under their subchapter headings to make the page more readable. Find copyright information on this text and about the book an the end of the page.
Derivatives are financial instruments that allow investors to get exposure to the price movement of an underlying asset without owning the asset. Derivatives have also become an important financial instrument in an increasingly tokenized economy. Synthetics are a special type of derivative that has gained importance in traditional finance, and has become one of the most important use cases for tokenization. They simulate the risk and reward profile of other financial instruments, usually by combining a set of other financial instruments, such as one or more derivatives, which result in the same risk profile as investing in an underlying security. This chapter will explain why many token use cases presented in this book are derivatives by nature, and why it is important to understand the core concepts of financial derivatives before one can understand potential implications of tokenization on money, finance and the real economy.
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Intro
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Types of Derivatives & Perpetual Contracts
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Purpose of Derivatives
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Synthetics
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Challenges & Outlook
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Chapter Summary
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Footnotes
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References & Further Reading
This is an excerpt from the book “Token Economy: Money, NFTs & DeFi”
RIGHTS
Copyleft 2023, Shermin Voshmgir
Creative Commons CC-BY-NC-SA
NON-COMMERCIAL USE
This license only allows reusers to distribute, remix, adapt, and build upon the material in any medium or format for noncommercial purposes only, so long as attribution is given to the creator. If you remix, adapt, or build upon the material, you must license the modified material under identical terms.
COMMERCIAL USE
For commercial use contact: hello@token.kitchen
BibTeX
@book{title={Token Economy: Money, NFTs & DeFi}, author={Voshmgir, Shermin}, year={2023}, publisher={Token Kitchen} }