If we want to study the tracks that will explode in the bull market, derivatives are definitely one of them. We can roughly divide the tracks into two types. One is the conceptual type, which is the new concept and the new pie. The other is the real growth of product data. In the bull market, trading is definitely one of them.
Taking the contract trading volume of BTC in the last bull market as an example, the trading volume increased by 17 times from 1.58 billion in March 2020 to a peak of 27.2 billion in April 21.
In the bull market of 2021, the exchange platform coins such as BNB, KCS, and OKB have skyrocketed. The logic is very simple, that is, the data is surging.
1. Potential of decentralized derivatives markets
In centralized exchanges, the volume of contract transactions has already exceeded the volume of spot transactions. To give a simple example, the spot transaction volume of the entire network in the past 24 hours was about 50 billion US dollars, while the 24-hour contract transaction volume was 150 billion US dollars. The contract transaction volume is about 3 times that of the spot transaction.
In the last bull market, a very important trend was the popularity of decentralized exchanges (DEX), such as Uniswap, Sushiswap, etc. After the experience of DEX, Binance OK Huobi and others first resisted it, then passively accepted it, and finally actively embraced it. In just one year, Uniswap's trading volume and market value in 21 years exceeded those of second-tier centralized exchanges.
In addition to spot trading, there are also derivatives in decentralized trading. However, in the last bull market, although some decentralized derivatives projects appeared, they did not develop much. The core reason is that the infrastructure is not perfect, because derivatives have higher performance requirements on the public chain. The user experience is always far behind that of centralized exchanges.
However, after this cycle of infrastructure development, as well as continuous innovation and product iteration by members of the derivatives track, we have been able to provide users with a good product experience.
However, according to the data, derivatives are still undervalued. Taking simple data as an example, the spot trading volume is 50 billion US dollars, while the 24-hour trading volume of dex, mainly Uniswap and Jupiter, is about 7 billion US dollars, accounting for about 14%. In contrast, the contract trading of centralized exchanges is 150 billion US dollars. The trading volume of decentralized contracts is 8 billion US dollars, accounting for only 5%.
In terms of market value, Uniswap's daily trading volume is about 2.5 billion US dollars, the circulating market value is 6.3 billion US dollars, and the FDV is 10.6 billion US dollars. On the other hand, dydx's daily trading volume is 1 billion US dollars, the circulating market value is 1.1 billion US dollars, and the FDV is 1.5 billion US dollars. If calculated with Uniswap's trading volume, it is at least underestimated by 2 times.
So in general, the current trading volume of decentralized derivatives has not really been fully utilized, and there is still at least 3 times the potential compared to spot. At the same time, when the bull market comes, the trading volume of the entire market may have more than 10 times the growth potential.
2 Main members of the derivatives track
In the decentralized derivatives track, the more famous names are dydx and GMX.
Dydx is a long-established decentralized derivatives market that uses an order book matching transaction method, which is the same as a centralized exchange. When the token was launched in 2021, it helped many people get rich. It uses low fees, deep liquidity and up to 20x leverage, and supports 67 cryptocurrencies. V4 is a Layer 1 public chain built on Cosmos
Dydx has always adopted a trading reward system, which is equivalent to trading mining. The trading volume has long been in the top three, with a daily trading volume of about 2 billion US dollars. The circulating market value is 1.1 billion US dollars, and the FDV is 1.5 billion US dollars.
GMX originated from Arbitrum, and its innovation is to use the AMM mechanism. It uses the LP pool. Unlike traditional matching transactions, there are no buyers and sellers as counterparties on GMX. Instead, counterparty transactions are conducted with the LP pool, and LP providers can obtain transaction fees, MM fees, etc. GMX once became the largest trading volume in 2022 and 2023, and it has high hopes. However, with the continuous emergence of outstanding players in the decentralized derivatives track, GMX is now often surpassed by many projects.
GMX's current daily trading volume is around 200 million to 500 million, and GMX's current market capitalization is 320 million US dollars.
3 SynFutures
What caught our attention was SynFutures, which was at the top of the trading volume list. Its 24-hour trading volume was 300 million US dollars more than that of the second-ranked dydx.
According to DefiLlama data, SynFutures' data has improved significantly since March this year. An important time point is that SynFutures released the V3 protocol on February 29. From the data, we can see that SynFutures' daily transaction volume has been basically in the range of 15M~30M throughout the past 23 years.
Since March 2024, the daily transaction volume has increased significantly. First, it increased to about 80M, and then reached about 300M in late March. Since April, the daily transaction volume has increased to 1B, which is 30~60 times that of last year. The highest daily transaction volume reached 1.7B.
From the data, we can see that SynFutures' daily trading volume is not stimulated by some short-term favorable factors. Instead, it has been at a very high level since April.
SynFutures's series of beautiful data made me study it carefully. The V3 version mainly launched the Oyster AMM (oAMM) system specially built for contracts, which has two major advantages.
The first major advantage is that it can achieve a separate liquidity pool for each derivative trading pair, which will not lead to global systemic risks. And it can allow liquidity to be concentrated in a specific price range like Uniswap V3 and Maverick. It greatly improves the utilization rate of funds and increases trading depth. From the data, the ratio of SynFutures' trading volume to TVL is as high as 19.48, far exceeding dydx's 2.68 and GMX's 0.34.
The second major feature of SynFutures is that it allows anyone to use any ERC 20 token as collateral on any EVM chain and complete the entire listing process in just 30 seconds. In my opinion, this has great potential in the future.
Speaking of this, let’s talk about the reasons for Uniswap’s success.
In the last bull market, the decentralized exchange Uniswap achieved a big leap forward. In just one year, its trading volume went from obscurity to approaching that of first-tier exchanges. Most people may attribute this to the inevitable trend of decentralized trading, but I disagree. The real reason is that it allows anyone to freely list and trade coins.
Let's recall that before the emergence of dex, if a coin wanted to be traded, even on a small exchange, it required BD, submission of materials, waiting for review responses, etc., not to mention the exchange's listing fees and various requirements, the entire process took a long time. On uniswap, it only takes 1 minute, and trading can be done after forming an LP. So the emergence of dex has brought great convenience. In the bull market, a large number of new projects emerge every day, and uniswap naturally becomes the first choice.
Therefore, the permissionless coin listing function in a bull market is a king-level function. Currently, only SynFutures has this function, which may become a powerful tool for the future to reach a higher level.
summary:
In this bull market, the derivatives track must be paid attention to. It is certain that the trading volume of this track has increased by at least 10 times in the bull market, which is a real improvement in fundamentals. In the derivatives market, there are also many competitors, including old brands such as dydx and gmx, which are still undervalued compared to spot.
SynFutures, the trading volume champion in recent months, is also worth paying attention to. It has not yet issued a token, so those who want to make money can participate in advance. After all, dydx made a lot of people rich. SynFutures, which has raised more than 36 million yuan, is also sought after by leading institutions such as Pantrea and Dragonfly.