Delta Exchange, a cryptocurrency derivatives trading platform that’s not regulated in any jurisdiction, revealed on July 24, 2020, that it has introduced interest rate swaps for MakerDAO‘s stablecoin, DAI.
The DAI stablecoin savings rate contracts offer “up to 160x leverage” on the notional value and opened for trading on Delta Exchange at 9:00 AM EST on July 24, 2020.
DAI aims to be a decentralized stablecoin that has been developed by Maker. At present, there’s around $1.5 billion worth of Dai that’s locked in the emerging DeFi market. Unlike fiat-based stablecoins, Dai is backed by extra collateral that has been locked in the Maker Vaults. Dai holders are able to earn interest through the Dai Savings Rate (DSR) by locking the stablecoin in smart contracts.
Pankaj Balani, CEO at Delta Exchange, explained that interest rates in DeFi vary depending on the platform and changing market conditions. This makes it challenging for borrowers to manage cash outflow and it also makes it difficult for lenders to accurately predict how much interest can be earned on deposited funds, Balani noted.
“With the launch of Interest Rate Swaps for the single biggest asset in DeFi, we aim to empower borrowers with better instruments to manage variable risks and liabilities.”
Delta Exchange’s Interest Rate Swap contracts offer a way for companies and hedge fund managers to swap variable interest costs with “one that is predictable and fixed.”
Borrowers and lenders that use Delta Exchange will now be able to use Dai Interest Rate Swaps to hedge against fluctuations on the Dai stability fee.
Quarterly expiries for DAI interest rate swaps (IRS) are now available on Delta Exchange.
In June 2020, Delta Exchange launched options trading for altcoins (alternative coins besides Bitcoin). Also in June, Delta introduced interest rates swaps for cryptocurrency rates.
In May 2020, Delta Exchange acquired a strategic investment from New York’s CoinFund.