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Tokenized Derivative Markets Meaning

Tokenized derivative markets enable derivatives such as options, swaps, and structured products to be issued and traded as on-chain tokens. These instruments replicate or extend traditional derivatives while leveraging blockchain programmability.

Smart contracts automate margining, settlement, and payoff logic, reducing counterparty risk and operational complexity. Tokenized derivatives can settle instantly and integrate directly with collateral and liquidity protocols.

Institutional adoption depends on robust pricing models, oracle reliability, and legal enforceability.

When designed properly, tokenized derivatives offer increased transparency and efficiency compared to legacy derivatives infrastructure.

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