HootDex Digital Derivatives

HootDex digital derivatives can be accessed on the HootDex decentralized digital asset swapping system when available. The digital derivatives will represent a number of different digital assets (SynthCryptos, Crypto Pairs, Forex Pairs etc) that would be available on HootDex, so each digital derivative will only represent one digital asset or token thus creating a digital non-deliverable forward “NDF” futures or options contract. That means that no delivery is made of the actual digital or physical asset itself such as a Bitcoin or Ethereum or Gold. 

Experienced Members will be able to participate in the digital NDF derivative system once they have reviewed the risk disclosures and become familiar with the system. All entry points and settlements of a digital 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 deposit tokens and stable coins may be utilized for entry and settlements on HootDex.

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. 

SynthCryptos, CryptoPairs, ForexPairs & Digital Derivatives

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. Derivatives can also represent various pairs of assets such as cryptocurrencies, stocks and currencies as featured on HootDex. 

This provides simple, cost effective exposure and entry point so rather than purchasing a singular stock, commodity or currency, a person or firm may purchase a SynthCrypto that represents a specific cryptocurrency in a liquidity pool with other digital assets, a CrytpoPair that represents two different cryptocurrency assets or a cryptocurrency/stock or currency pair in a liquidity pool with other digital assets or a Basket which represents 5 different types of assets in a liquidity pool. These are all non-deliverables. 

Digital Derivatives represent the various SynthCryptos, CryptoPairs and Tokens on HootDex where an individual or a firm may purchase an NDF futures contract, call option or sell a put option that represents the same. The use of digital derivatives 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.

HootDex allows members to have exposure to various  CryptoSynths, CryptoPairs and ForexPairs representing various singular cryptocurrencies such as Bitcoin, various cryptocurrency pairs which include currencies, stocks and commodities and various currency pairs that are converted to US Dollars. All have liquidity pools associated with them, the pricing of each digital asset is impacted by the specific average pricing of the pair, the pricing of the digital assets in the liquidity pool as well as the supply and demand of the liquidity pool itself.

According to Visual Capitalist the high-end estimate for the value of all derivative contracts and derivatives 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 decentralized derivative products on HootDex allows members to earn returns without a physical settlement, arbitrage trade, transfer risk and hedge against price fluctuations. 

HootDex SynthCryptos, CryptoPairs and ForexPairs representing various cryptocurrency, currency, commodity and stock pairs, all aim to give individuals or firms exposure to a variety of different digital assets without needing to hold the underlying asset. 

By working with these unique digital assets, individuals and firms can still hold tokens in their own wallet, Self Custody, that track the value of these assets without needing to leave the cryptocurrency ecosystem. HootDex lisitings of digital assets are decentralized tokens built on the layer-1 blockchain network Pecu Novus offering members all the benefits of decentralization, as it is open to all members across borders using a self custody wallet. The use of secured smart contracts stored on a distributed ledger plays a big role for digital derivatives on HootDex as it relates to short selling and options. 

For example let’s say that an investor wanted general exposure to Bitcoin and Tesla stock or Bitcoin and Gold they would simply swap for that Synthcrypto token on HootDex. On the other hand lets say that an individual or firm wanted sell short a Bitcoin and Gold token pair or Ethereum and Crude Oil token pair, they would be able to do so on HootDex simply by locking 150% of the value of that trade in Pecu Novus Coins in their self custody wallet. 

Upon buying back the token in the open market they would be closing out the transaction and either booking a profit or a loss. All transactions close out in Pecu Novus Coins, to avoid slippage a member can opt to swap Pecu Novus Coins for a stable coin on HootDex as well. The automated market maker system on HootDex is what allows this to occur as it was built to integrate short selling parameters.

This enables users to gain access to synthetic products that simultaneously give them exposure to non-cryptocurrency assets such as commodities, gold, currencies and stocks. Each short position will have a loss limit equal to the 150% of Pecu Novus Coins locked for a trade, when that loss limit is reached the trade is automatically closed with a buy of that token. This prevents any member from exceeding the value locked for any particular short sale.

Each member has the ability to swap their SynthCrypto or Decentralized Derivative tokens for other tokens on HootDex without the need for an intermediary. This gives them exposure to various Project Tokens, SynthCryptos and Decentralized Derivatives.

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 SynthCryptos and Decentralized Derivative Tokens and the 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 decentralized SynthCryptos, CryptoPairs, ForexPair, Digital Derivatives and NDF option derivatives and give members as many options as possible to have exposure to various real world and digital assets.