New DeFi Futures To Hedge Against The Difficulties Of Bitcoin Mining

SynFutures is a decentralized derivatives exchange. The company recently announced that it is launching a new product known as Bitcoin (BTC) Hash Rate Futures. This product will make use of the biggest cryptocurrency’s ever-changing mining difficulty with the aim to open long or short positions. This product is currently being promoted in the market as fully decentralized hash rate futures. The company’s new offering to the customers will allow them to trade on Bitcoin mining difficulty with the help of Wrapped BTC (wBTC). Hash rate and mining difficulty are the two main mechanisms of Bitcoin.

Bitcoin has become more famous in the market due to the massive outflow of miners after China’s suppression. Its system has a different working environment. The bitcoin network needs that the difficulty of mining gets adjusted every 2016 block. This is so that it can counter Bitcoin’s hash rate-the computing power used for mining. Cointelegraph has explained its mechanism in detail. This is a two-way mechanism. And, it continuously maintains a constant block time or the amount of time that it takes to find each new block when mining Bitcoin.

As per the announcement made, the company developed the Hash Rate Futures which are currently in the closed alpha stage. Hash rate was possible by developing an oracle so it can validate Bitcoin block headers directly. It focuses on extracting all the potential mining difficulties. Every futures contract depicts an expected reward for mining a block in BTC during the reset time at a particular difficulty level. After this, the cryptocurrency miners will be able to cut short the hash rate futures. This will hedge the risk of increasing mining difficulty or long electricity futures to determine energy costs.

What Does Rachel Lin Has To Say?

Rachel Lin is the founder and CEO of SynFutures. She commented that her team always wanted to allow all the traders to hedge against all the factors that affect their mining returns. Further, she added, “There hasn’t been a derivatives product targeting mining difficulty, which is vital to a miner knowing how much return their rigs are going to generate. With Hash Rate Futures, we’re filling in this gap for miners.” In the last month itself, the company closed a $14-million Series-A funding round. It was led by Polychain Capital along with the participation of host major cryptocurrency investors. They include Pantera Capital, Framework, and Wintermute.

Related Articles