HootDex Digital Asset Derivatives

HootDex digital asset derivatives can be accessed on the HootDex decentralized digital asset swapping system. The digital asset derivative may represent a number of different assets however each digital asset derivative will only represent one asset thus creating a synthetic asset such as a digital asset non-deliverable forward “NDF” futures or options contract. 

Experienced Members will be able to participate in the digital asset NDF derivative system once they have reviewed the risk disclosures and become familiar with the system. All entry points and settlements of a digital asset NDF derivative are solely completed with Pecu Novus Coins. This provides an extra layer of security for HootDex members and prevents loses due to theft or hacking of an external wallet. In the near future specifically designated stable coins may be utilized for entry and settlements on the HootDex digital asset NDF derivatives system.

Another important feature of HootDex are the end to end security and proprietary security protocols set in place to protect members from fraud and theft. Because HootDex is a decentralized extension of the MVault, those same security protocols are able to be put in place.

Simplicity is key, HootDex was developed for ease of use but with having a serious system on the backend. Basically bridging Web2 with Web3 and providing the security that is needed for decentralized systems. 

Synthetic Assets

Lets go over what a synthetic asset is, it basically refers to a mix of assets that have the same value as another asset. Traditionally, synthetics combine various non-deliverable forward derivative products such as options, futures or swaps that simulate an underlying asset, this asset can vary from stocks, bonds, commodities, indexes, currencies or interest rates. 

This provides simple and cost effective exposure and entry point so rather than purchasing a stock or commodity, a person or firm may purchase a NDF futures contract, call option or sell a put option that represents the same. The use of synthetic assets here allows the person or firm to make use of multiple financial vehicles rather than a single investment asset, it gives them literal options to benefit from.

According to Visual Capitalist the high-end estimate for the value of all derivative contracts is upwards of $1.4 quadrillion, now compare that to the global real estate market that sits at approximately $280 trillion, the global debt market that sits at approximately $250 trillion, the global stock markets that sit at approximately $89 trillion, the world’s supply of silver that sits at approximately $44 billion and  the world’s supply of gold that sits at approximately $10 trillion. 

Derivatives can be used to help take price risk out of a variety of assets like commodities, stocks, cryptocurrencies and debt. In some cases derivatives can promote and exacerbate market inefficiencies, encouraging a zero-sum game among traders rather than creating true market value. The use of non-deliverable forward derivative products on HootDex allows investors to earn returns without a physical settlement, arbitrage trade, transfer risk and hedge against price fluctuations. 

Pecu Novus based synthetic assets aim to give people or firms exposure to a variety of different assets without needing to hold the underlying asset. This could be anything from fiat currencies, such as the United States dollar or the Japanese yen, to commodities like gold and silver, as well as index funds or other digital assets. 

By using these unique synthetic assets, investors can still hold tokens in their own wallet, Self Custody, that track the value of some assets without needing to leave the cryptocurrency ecosystem. Pecu Novus synthetic assets also offer users all the benefits of decentralization, as it is open to all users across borders by using secured smart contracts and all data is stored on a distributed ledger. 

For example let’s say that an investor wanted to buy Facebook stock worth around $2,000 through HootDex then $2,000 of value of a members Pecu Novus Coins in their self custody wallet would be pegged against the price of Facebook’s stock. If Facebook goes up or down, the equivalent amount of PECU would be added or subtracted from the user’s contract. 

So in essence and for clarity purposes an investor would essentially be taking a short position on PECU while taking a long position on Facebook, the hedged asset. Meanwhile, HootDex would take a long position on PECU while shorting Facebook. 

This enables users to gain access to synthetic products that simultaneously give them exposure to non-cryptocurrency assets such as gold, USD and stocks. HootDex allows users to issue various synthetic assets, including fiat, derivatives, cryptocurrencies and different asset classes. Examples could be Bitcoin, Yen, Euro, USD, Facebook or Amazon stocks as well as gold and silver.

The member puts collateral, in the form of Pecu Novus Coins “PECU”, in order to create these synthetic assets. Then the member would be able to swap or exchange one synthetic asset for another, repricing the collateral through an oracle without an intermediary. Since HootDex is decentralized it makes it simpler to achieve without concern of over leveraging by a centralized institution. 

In short approved HootDex members users have the ability to create or use NDF financial products, using protocols such as PNP-16 to create tokenized derivatives that grant them exposure to real-world underlying assets similar to how traditional exchange-traded funds function. 

Pecu Novus collateralized synthetic currency models powered by smart contracts can have enormous implications in the traditional finance industry. This model offers Pecu Novus Coin holders the leverage to trade traditional assets as well as their derivatives while remaining in the digital ecosystem. 

Decentralization grants open-access to a global community of investors. Before systems such as HootDex became available, only a select few institutional investors could access the global derivatives market. Now basically any Pecu Novus Coin holder with a mobile phone as well as a basic to intermediate understanding of the synthetic asset process can access this powerful investment vehicle. 

Benefits of Synthetic Digital Assets

One of the main drivers of the growth of synthetic digital assets above traditional synthetic assets is the utilization of blockchain technology. Blockchain technology brings immutability and security into the equation, as transactions are transparent and traceable. All transactions are verifiable so there can never be a dispute to a completed transaction, everything is automated including settlements and all outcomes are absolute.  Smart contracts are used in order to provide a self-executable system for each and every synthetic digital asset.

The decentralized part of it is what breeds trust above centralization, even in the world of digital assets there is centralization but that has led to a host of issues such as the collapse of various cryptocurrency lending institutions and centralized cryptocurrency exchanges.  Decentralized digital assets exchanges or swapping systems typically function without the integration of traditional banks or brokerage firms, it eliminates archaic processes and transaction processing and settlement times. It eliminates human error as it is automated with automated market makers in place, it promotes self custody of digital assets so that holders control their own digital assets and not a centralization organization.

The robust nature of a decentralized digital asset exchange of swapping system puts the control in the investors hands for the very first time, HootDex will continue to introduce various synthetic digital assets and give members as many options as possible to have exposure to various real world assets.