Thread by @0xcarbon

1/ Derivatives are invaluable tools in #TradFi that enable market participants to hedge risks, exploit opportunities, and improve financial & operational efficiency.

In the 4th edition of #CarbonCore, find out how Carbon changes the game & supercharges decentralized derivatives

2/ Crypto derivatives boast a multi-billion dollar marketcap dominated by perps, futures & options that make up ~57% of the total crypto trading volume. CEXs take a lion's share of this volume, but infrastructure for decentralized derivatives remains largely underdeveloped.

3/ This can be attributed to the technical complexities of supporting these contract types, and why perps —the simplest form of derivatives — are the Goliath of the sector.

4/ But much like the wave of DEXs that swept up the monopoly of CEXs, the rise of decentralized derivatives is inevitable.

5/ Current derivatives platforms tend to be singular, focusing on one core product without extending beyond to other financial instruments and constructs.

But what if there was one protocol that could do it all?

6/ Carbon is leading that charge.

As a scalable, layer 2 sidechain built on Tendermint and Cosmos-SDK, Carbon can support almost any financial asset from derivatives to synthetic assets without compromising security, speed or cost.

7/ Anyone will be able to bootstrap financial markets for any asset type on any blockchain using Carbon as a DeFi building block. Some supported constructs include:
✅ Derivatives (futures, options, perps, prediction markets etc.)
✅ Cross-margin
✅ Multi-asset collateral
✅ CDPs

8/ These capabilities are underscored by 3 vital components built into Carbon’s robust architecture — on-chain oracles, pricing engine & its settlement protocol.

9/ For Carbon's derivative markets, underlying price feeds can be created through oracles via governance which allows for trading of assets with USD settlement without needing to support the actual token itself.

10/ This allows for a variety of markets such as indexes, stocks, commodities & non-digital assets to be traded via the CFD market.

A contract for differences (CFD) is a financial contract that pays the differences in the settlement price between the open & closing trades.

11/ The index price of a futures contract is determined by oracles. Carbon validators are the oracles for the protocol, and must submit last traded prices from various constituent spot exchanges via "votes" to the chain for the oracle to determine the index price of a market.

12/ As one of the few protocols on @cosmos that can handle settlement infrastructure, Carbon unlocks a whole myriad of derivative markets for the #Interchain⚛️, starting with decentralized futures & perpetuals.

13/ The protocol’s order matching system can efficiently settle thousands of order matches within a single block and is front-running resistant, ensuring costs can remain low for users while maintaining high transaction throughput for any financial market.