Foreword

Currently, the crypto decentralized derivatives segment is at an early stage of development and boasts great opportunities for growth. However, difficult access to liquidity is becoming one of the biggest problems of this sector. For example, despite their good liquidity and high trading volume, the leading decentralized derivatives protocols dYdX and GMX pay high costs for their coveted liquidity and therefore have negative profitability. The profitability rates of dYdX and GMX were -35% and -137% between June and December last year.

Derivatives platforms, especially leveraged contract-based CEX platforms, on the other hand, represent one of the most profitable segments in the crypto industry. The clear comparison of these two sectors suggests that the fundamental problem in achieving profitability in the decentralized crypto-derivatives protocol is due to the logic of the contract products rather than their liquidity mechanisms.

In addition to crypto-derivatives, the NFT segment also faces very serious liquidity issues. In particular, the blue chip NFT assets represented by BAYC, CryptoPunks, Azuki, etc. have low capital utilization. We observe the rise of NFTFi of NFT-based derivatives, especially based on the loan segment with NFT assets as the core. Some data show that NFTFi issued loans of more than $40 million in 2021, while the cumulative loan volume reached $155 million from January to May 2022, which is far below the total transaction volume and market value of the NFT market at that time. This means that there is still a large amount of NFT value to be unlocked and a lot of room to explore in this area.

It is based on FT and NFT that ProTradex is exploring new opportunities in the crypto decentralized derivatives market and liquidity market, where there is plenty of room for future growth.