DEFI DERIVATIVES: EVERYTHING YOU NEED TO KNOW

Summary from the TLDR Crypto newsletter

DeFi derivatives have surged in adoption since 2020, now holding $5.37B in TVL with daily volumes rivaling centralized exchanges, but they face structural challenges around liquidity, execution, and scaling. There are tradeoffs across design choices (AMM vs. orderbook, cross-margin models, and clearing layers) and it can be difficult to transition protocols (e.g., GMX and dYdX) without fragmenting users or liquidity. While TradFi still wins on capital efficiency and margin infrastructure, DeFi offers unmatched permissionless innovation and global access, positioning it as the future of derivatives settlement once scaling and interoperability are resolved.