GSR has completed the first ever cryptocurrency variance swap transaction with BlockTower Capital. A variance swap is a type of financial derivative product, common in traditional financial markets, that enables institutions and experienced traders to directly hedge against the volatility of a market or index, in this case Bitcoin.
“Structured products have emerged as a direct result of extreme uncertainty in this rapidly growing space,” said Rich Rosenblum, CoFounder of GSR. “It is natural for prudent CFOs to seek ways to isolate and mitigate unwanted risks on their balance sheets. Thankfully appropriate risk management tools are becoming more readily available. BlockTower is one of many highly sophisticated counterparties that GSR is working with, others include mining pools, lenders and exchanges. As the market evolves, more players have been wanting customizable protection against unwanted market swings.”
Structured products and derivatives are commonly used in financial markets to mitigate against extremes in risk and return. For example:
– Foreign Exchange markets have a tendency towards low volatility, so their structured products are often developed to increase the volatility of returns.
– Commodities and now cryptocurrency markets experience high volatility, and most of the interest in structured products is from established corporate entities looking for risk management solutions.
The introduction of structured products to crypto aims to reduce undesirable risk, as is generally in the interest of institutional players or corporate entities. Similarly, the latest suite of structured products from GSR are engineered to reduce volatility and benefit the portfolio and business models of sophisticated counterparties in the cryptocurrency space by better defining and constraining their risk parameters.
GSR’s Variance Swap allows institutions, like BlockTower, a direct means to hedge volatility, effectively introducing more options for stabilizing returns of the end investor.
GSR was founded in 2013 by veterans from the traditional finance and tech worlds, and remains one of the most experienced companies in digital asset trading and market making. In the past six years they have created one of the fastest and most robust trading systems in the crypto industry. They have successfully traded and managed billions of dollars worth of digital assets through their established software platform. Their team draws experience from Goldman Sachs, Two Sigma, and IBM, bringing world class financial knowledge together under one crypto roof.
To learn more visit: www.gsr.io