Description

These tokens relate to platforms offering leveraged trading, perpetual swaps, or options. Users hold these tokens to govern the platform, stake for fee discounts, or earn a share of the revenue.

Risks

Insurance fund depletion. Derivatives platforms use an insurance fund to cover trader profits that exceed the losses of other traders. In periods of extreme volatility, this fund can be depleted. If the fund runs dry, the protocol may fail, socialise losses among users, or suffer a collapse in the value of its native token.

Regulatory intensity. Derivatives trading is highly regulated in most jurisdictions. Decentralised derivatives platforms face significant legal risks regarding their operation, particularly concerning offering leverage to retail users.