New DeFi futures can hedge Bitcoin mining difficulty

SynFutures, a decentralized derivatives exchange, announced the launch of a new product called Bitcoin (Bitcoin) Hash rate futures, which use the changing mining difficulty of the largest cryptocurrency as the basis for establishing long or short positions.

SynFutures’ new product is touted as a fully decentralized hash rate futures that will allow users to use Wrapped BTC (wBTC) to trade on Bitcoin mining difficulty.

Hash rate and mining difficulty are the two core mechanisms of Bitcoin, which become more popular with the outflow of miners China’s repressionThe Bitcoin network requires that the mining difficulty be readjusted every 2,016 blocks to counter the Bitcoin hash rate, the computing power dedicated to mining.

As Explanation Detailed by Cointelegraph, this two-way mechanism maintains a constant block time, or how long it takes to find each new block when mining Bitcoin.

According to the announcement, SynFutures developed a hash rate futures by designing an oracle to directly verify the Bitcoin block header and extract the mining difficulty, which is currently in the closed alpha stage. Each futures contract represents the expected block mining reward in BTC during the difficulty reset period of a given difficulty level.

Miners will be able to short hash rate futures to hedge the risk of increased mining difficulty or long power futures to determine the cost of electricity.

related: How to mine Bitcoin: everything you need to know

SynFutures founder and CEO Rachel Lin said that the team hopes to enable traders to hedge all factors that affect their mining revenue. She added:

“There are no derivatives for mining difficulty, which is crucial for miners to know how much returns their rigs will generate. With hash rate futures, we are filling this gap for miners.”

Last month, SynFutures completed a $14 million financing A round of financing Led by Polychain Capital, many well-known crypto investors participated, including Pantera Capital, Framework and Wintermute.