1/Crypto derivatives are poised to be one of the big growth stories of 2022

As the industry matures and infrastructure grows to facilitate ensuing demand we expect breadth & volume of derivative products to grow substantially

Full @JumpCryptoHQ thesis:
2/ Today, most crypto derivatives volume is concentrated in centralized perp futures exchanges

Centralized options venues, as well as decentralized venues across futures and options remain relatively nascent
3/ We expect two factors that have been gathering steam over the past year to drive growth over the next twelve months:

i) Rise of relevant infrastructure
ii) Increased participation from organized players
4/ To better understand the importance of the latter, it is helpful to understand why institutions use derivatives to a greater extent than spot in traditional financial markets
5/i)Capital efficiency: Long as potential drawdown is < leverage factor derivatives are more capital efficient

ii)Tax efficiency: 60% of gains on derivatives are taxed as long-term regardless of duration

iii)Hedging: Hold long-term cash position while hedging against volatility
6/ As this participation ramps, we expect an increasing portion of volume to reflect on centralized options venues, which currently represent <2% of overall derivatives volume, supported by two key pieces of infrastructure:
7/ i)New breed of more sophisticated exchanges

ii)OTC liquidity aggregation networks like @tradeparadigm that offer guaranteed settlement against KYC'd counterparties
8/ In addition to centralized options volume, we expect to see meaningful growth in decentralized derivatives, which currently make up <1% of overall volume, led by a different cohort of participants

We expect this growth to be driven by three factors:
9/i) Rise of low-cost/high speed L1s: Low barriers to trade + lower margin of error in strategies. This is true particularly for options

ii)Composability+cross-chain adoption: As connectivity grows and liquidity becomes less siloed, more projects will build atop core primitives
10/ iii)Growth of Decentralized Options Vaults (DOVs) which democratize access to implied vol driven organic yield + scalable way to manage non-linear risk

@ribbonfinance ($300M TVL), @friktion_labs (~$100M TVL), @ThetaNuts (~$55M TVL) have already demonstrated meaningful demand
11/ We believe we are at the precipice of tremendous growth in the crypto derivatives market over the coming months and are excited to back some of the top projects enabling this growth.

If you are building in this space, my DMs are open

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More from @shanav_m

12 Nov 21
1/ India is quickly becoming a crypto powerhouse, led largely by the quality of founders entering the space

@jumpcapital has been backing Indian crypto founders since 2020 and we're now doubling down on our participation in the Indian ecosystem

Here's why 🧵
2/ Appetite for and engagement with crypto in India is unparalleled

An estimated ~15-20M Indians own crypto. This is ~1.5% of the world's second largest population

Compare this with ~3.7% participation in the ~50 y.o. Indian equity market, and the traction is staggering
3/ As most folks here can attest, investing in crypto is often the gateway to building

And we are seeing this happen at an unprecedented rate

On the back of the success of @0xPolygon, @CoinDCX, @CoinSwitchKuber, @WazirXIndia India is rapidly producing a wave of quality projects
Read 9 tweets
12 Oct 21
1/ How stablecoins could soon go from a $130B market to a multi-trillion dollar market 🧵

Link to the complete @jumpcapital thesis below:

2/ Stablecoins gained meaningful traction over the past year as a base pair for most crypto exchange markets, as trading volume grew

We believe that the next leg of stablecoin adoption will be as a global medium of exchange
3/ While the lightening network has shown some progress, we believe that stablecoins will be the dominant medium of exchange crypto-asset in the near to mid-term for two reasons

i. Composable with digital economies
ii. Single, stable currency denomination
Read 11 tweets

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