Interest rates enhance global finances. Economic growth and activity, inflation rate and the prices of assets and the general health of the global economy can be measured by their markets. As institutional investors begin to increase their adoption of cryptographic investment vehicles, we are delighted to announce our seed investment in Rho Labs, the developer of the Rho protocol, the first exchange of cryptonative rates of the world. When wearing the chain market rates, Rho Labs carries all the services and risks management capabilities of interest rates to crypto.
The history of markets derived from interest rates
In their natural state, interest or performance rates are variable or “floating”, which makes them susceptible to market forces. At the beginning of the 1980s, interest rates swaps, where counterparts exchange fixed versus floating payments, allowed the transfer of interest rate for the first time. Today, interest rates swaps are crucial financial instruments that play an important role in the global economy by helping companies, governments, financial institutions and even individuals (for example, those with fixed rate mortgages) administer the risk of interest rates and optimize their debt structures.
The usefulness of interest rate derivatives cannot be underestimated. They are one of the most used types of derivatives, where two parts exchange (exchange) payments of future interest rates based on a notional amount. For institutions and people who seek to block their assets or liabilities, execute an exchange of fixed interest rates versus floating allows them to cover. Like other derivative markets, SWAPS also allow market participants to speculate on the tariff direction. In this capacity, they are used by institutional investors, merchants or coverage funds to speculate on future movements in interest rates or to exploit arbitration opportunities. For example, if an investor believes that interest rates will increase, they could enter an exchange where he pays a fixed rate and receive a floating rate, waiting to benefit from the increased floating rate. While this speculative use adds risk, it also contributes to liquidity in exchange markets. Together, setgers and speculators exchanges interest rates some of the most liquid markets in the world, and are backed by a robust electronic commerce infrastructure and compensation. It is not surprising that those derived from interest rates are, with much, the largest notional derivatives market with almost $ 600 billion in notional as of June 2024.
While interest rates markets are omnipresent in traditional finances, these markets remain underdeveloped in cryptographic space. However, rates are also ubiquitous throughout the cryptographic economy. The examples include the performance rates of the blockchain test test as Ethereum and Solana, and the perpetual exchange financing rates. But with few tools in the chain to cover the risk, these markets have historically remained within the limits of traditional finances, depriving the participants of the cryptographic market of this fundamental tool for risk management.
Building a Ochain Rate Market
RHO LABS is building a market of derivatives of interest rates of non -custodial institutional degree in the referee, promoting the trade of safe and transparent chain for specific cryptographic rates, such as reestimations and perpetual financing rates. The platform was founded in 2022 by the former traditional veteran of Finance and Director of Products of Copper Alex Ryvkin, who has spent the last years rooted in the construction of the institutional infrastructure for Web3. With the desire to build this highly attractive market for fixed and floating rates in Ochain, it has brought together a team of world -class technologists and engineers to bring this market to cryptographic investors.
The protocol offers the well -busy utility of interest rates exchanges to cryptonative space, allowing end users to change fixed by floating rates. Two examples below:
The support of the RHO protocol for the participation of the fixed rate is essential for cryptonative rate markets, since it allows validators to stabilize their income flows that allows them to boost sustainable commercial operations. Traditionally, validators take a percentage of rewards earned for their customers, but volatile variable protocol rewards make it impossible to predict future income and, therefore, plan and administer budgets. The usefulness of fixed betting fees, possible through fixed versus floating exchanges, helps to carry this traditional stability of native finance to validators. Recognizing the usefulness of this product, the market recently witnessed the launch of the first reference rates swaps that were executed on the counter (OTC). This concept test is an important step forward for cryptography markets, since fixed income markets enter the scene. As this rising nascent industry, market participants will inevitably need electronic markets such as the RHO protocol and another infrastructure.
In Crypto, perpetual swaps dominate the derivatives trade, with cumulative negotiation since 2020 exceeding $ 60 billion. One of the cornerstones of the perpetual swaps are the financing rates, which ensure that the price of the perpetual contract remains close to the spot price (market) of the underlying asset. Recently, tokenized base operations allow users to benefit from positive financing rates to boost performance to their end users. However, the financing rates are variable and, before the Fixed Floating Floating Financing Contracts of the RHO protocol, those who seek to benefit from the negotiation base had no tools to cover this volatility and set their fees. The financing rates of perpetual futures of the RHO protocol open new opportunities for leverage trade, basic trade and improved performance strategies, and are attractive to institutions that include ETFs and emitters of Stablecoin.
The nascent fixed income markets are expected to be an area of exponential growth since regulatory standardization catalyzes the institutional adoption of cryptography markets. Bringing the obvious utility of fixed exchanges versus floating swaps to cryptographic markets unlocks new opportunities for risk management, structured products and even speculation. The deep and liquid encryption rates markets, facilitated by the RHO protocol, will further close the gap between traditional and cryptographic markets.
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