Trading Over-The-Counter (OTC) options on-chain represents an important shift in the finance industry. Blockchain technology provides many advantages to this traditional method of trading, providing increased transparency and less credit risk in comparison with off-chain margin solutions. Galaxy Digital, a crypto-focused investment firm, has recently completed its very first on-chain OTC options trade with the crypto-investment firm Coinfund.

The platform Aevo was used to execute the trade, margin, and settle the options trade. Initially designed for the Ethereum token, Aevo has since gone live on mainnet, expanding its services to include altcoin options on weekly, biweekly and monthly maturities. The platform offers several advantages to users including advantageous margin requirements, on-chain payoff enforcement and pre-defined rules surrounding margin requirements.

The move follows a trend of increased demand for on-chain solutions due to the collapse of several centralized entities in the crypto-market in the past few months. Frontrunning the current trend, Galaxy Digital executed a special OTC crypto-transaction with banking giant Goldman Sachs a year ago.

Jason Urban, Global Head of Trading at Galaxy Digital, provided further context for the motivation behind the new OTC options trade. Urban claimed that the smart contract provides a high-level of security in comparison to traditional OTC trades, as even in case of a counterparty default, the other party on the trade is able to receive the money they are owed.

In summary, trading OTC options on-chain is a useful shift from traditional finance models that allows for increased security, transparency and less risk. Galaxy Digital is leading the charge in terms of adoption of such blockchain technology with their recent OTC trade with Coinfund, their transaction with Goldman Sachs and their increasing number of counterparty investors.



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