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Cryptocurrency Derivatives Series: eToroX’s Lira To Support Crypto-Derivatives With Liquidity Providing
The cryptocurrency derivatives market has begun to obtain myriad interests after the recent trends in Bitcoin price sentiment. There has been a long waiting of cryptocurrency aspirants for institutional investors. Although the launch of bitcoin futures contracts on regulated exchanges in late 2017 made a bit of a buzz but didn’t gain a lot of traction, of late, Bakkt appears to be striking a chord in the new FinTech arena.
But for now, in yet another case, eToro has announced its latest crypto-project “Lira” which is built on eToroX ecosystem.
Lira enables clients to generate crypto derivatives with a simple piece of code. With the help of that code, the Bitcoin futures contract can be generated with the known counterparty.
It is the new open-source programming language which is the first step in bringing $500 trillion OTC derivatives market onto the Blockchain.
Yoni Assia, CEO and Co-Founder of eToro, commented: “Bringing the OTC derivatives market onto the blockchain will bring more transparency and capital efficiencies to the industry. Activities in the post-trade cycle, such as settlement and the clearing of derivatives, are both expensive and a source of systemic risk. We believe that blockchain technology can provide a secure execution environment in which settlement is guaranteed by design. That is why today we are introducing a new formal contract language – Lira. This has the potential to open up and transform the derivatives market.”
While Prof. Omri Ross, eToro’s Chief Blockchain Scientist, says that “45% of smart contracts on the Ethereum blockchain have errors because of the broad nature of their design. Lira is built on formal verification, a mathematical equation that proves the language will deliver the promised outcomes.
Amid regulatory obstacles, Assia admits his fear for regulatory backlash, especially if eToro acts as a market maker for such instruments. Anticipating derivatives avenues having worth more than $500 trillion, he seems to be playing a role of liquidity provider on these derivatives contracts.