After Introducing Cryptocurrency Variance Swaps back in April, GSR, together with Block Tower Capital, has successfully conducted the first BTC Variance Swap. Basically, a Variance Swap is a kind of financial derivative product. The main function of a Variance Swap is to allow institutions and active-experienced traders to directly safeguard themselves from market or index turbulence.
The co-founder of GSR- Rich Rosenblum, said that the extreme unpredictability in the ever-changing and lightning-fast space (crypto space) had given birth to the structured products. In his statement, he touched upon the topics of CFOs and risked management around them in the following ways-
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.
Regarding BlockTower he said that it is one of the “sophisticated” companies that BlockTower is currently working with. Other companies include “mining pools, lenders and exchanges.” He further referred to the current market scene where players need “customizable protection” against unpredictable market turbulences.
The role of the structured products and derivatives is to lessen the gravity of the extreme turbulence and the related risk involved. For instance, the forex market often faces low volatility. Therefore the structured products which are developed for this field aim at increasing returns.
The structured products in the crypto sphere are expected to stabilize the uncertainty and market turbulence in order to minimize risks. As of now, the latest structured products from GSR are designed to decrease turbulence and also to support the various business models.