Today's currency exchanges are predominantly centralized, many of them are proven to be vulnerable to security breaches. This is a major issue, given the fact that they operate as custodians for customers. Consequently, several centralized exchanges (CEX) have been accused of wash trading, price manipulation, and restricting traders by taking advantage of their lack of transparency within their internal operations.
With the advent of blockchain technology, trading has shifted to the popular decentralized exchange (DEX) model. This trading method enables trading at high speeds, as well as cheaper gas fees. While simultaneously eliminating custodianship and enhancing transparency. Derivative markets in the existing financial ecosystems dominate over any other form of asset. Furthermore, its market is projected to be worth more than $1.2 quadrillion, ten times the global GDP. As decentralized platforms mature, they are poised to offer significant advantages over traditional centralized financial systems, especially as demand ramps up.
In regards to risk management, there is a general notion regarding professionals and institutional market participants. These market participants primarily constitute the dominant entities that trade derivatives-based financial instruments. Although this is true to a large extent, retail investor trading of derivatives has been gaining traction, as access to financial technologies mature.
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