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Orbit Markets, a leading institutional liquidity provider of crypto options, has partnered with execution broker PI Digital to launch the industry's first derivative product focused on a hybrid of bitcoin and gold.
This initiative is part of the recent trend among crypto industry companies to offer stable returns amidst periods of economic instability. It seeks to offer investors access to both gold and digital assets, two assets known for their ability to maintain their value.
“This hybrid asset product is a perfect fit for investors that have experience in traditional assets such as gold and are now starting to dip their toes into digital assets,” OrBit Markets said in a press release.
The XAUT derivative product is a gold-backed token issued by Tether. OrBit, the Singapore-based company, has indicated that upon maturity, the product can be settled in either USDT, XAUT, or bitcoin, as designated by the company.
In its statement, OrBit highlighted that traditional financial service firms (TraFi) frequently provide hybrid products, which may include a combination of stock and commodity assets.
The company stated that there has been an increase in investors who are expecting a long-lasting rally in the two "safe haven" assets due to mounting worries over the U.S. Federal Reserve's hawkish monetary policy and the resulting instability in the banking industry.
“It's a dual option on both BTC and XAUT,” OrBit said, adding that investors could cover “various sophisticated views” on bitcoin and the XAU token, including increases or decreases in returns for both, or if returns for one of the assets climbs but fall for the other.
A “worst-of-put option” will also ensure, for example, that “if any underlying (asset) falls, the investors will be "put" into the worst performer. Otherwise, the investor will receive an enhanced yield,” the liquidity provider said.
In March, MEV Capital, an asset management firm specializing in DeFi, utilized options contracts issued by OrBit markets to safeguard the positions of liquidity providers and avoid losses in Uniswap (v3) liquidity pools.
“OrBit aims to offer flexible solutions to our counterparties,” Pulkit Goyal, OrBit Markets VP of Trading adding that “OrBit plans to launch further hybrid products dedicated to institutional investors.”
Source Coindesk
