Derivative Tokens

Definition ∞ Derivative tokens are digital assets whose value is derived from an underlying asset, index, or financial instrument. These tokens enable exposure to traditional or crypto assets without direct ownership, offering various trading and hedging strategies. Examples include tokenized futures, options, or synthetic assets that track real-world prices.
Context ∞ The proliferation of derivative tokens significantly expands the financial utility and complexity of the digital asset landscape. News frequently covers the regulatory challenges and market liquidity considerations associated with these instruments. Their development allows for more sophisticated financial engineering within decentralized finance, but also introduces additional layers of risk.