If you don't engage in derivation, you still need to understand derivation.

"A flute and a sword express a lifetime's intentions, bearing the wild fame for fifteen years."

I worked in investment banking for a full fifteen years, focusing on spot algorithmic trading for the first ten years. If we count from 2006, one could say I was one of the early pioneers of algorithmic trading in the Asia-Pacific region. In the last five years, I began to expand into swap trading, and I also needed to delve into areas such as financing, custody, and inventory. In the final years, futures, options, and other derivatives trading also fell under the team I led, but I had long passed the age of relearning, so I handed over the futures operations to younger traders in the team. In other words, my investment banking career has hardly involved derivatives (swap products belong to linear swaps, which strictly speaking do not count as derivatives).

Not having worked with derivatives in the workplace does not mean I deny their importance.

When I was young, I always thought that spot trading was the way to go. Why? In the trading floors of investment banks, the loudest voices and the most eye-catching displays always belonged to spot traders. Those in movies shouting at six or eight screens are also spot traders. But later I slowly realized that spot trading is extremely competitive, commissions are constantly being squeezed, and marginal profits are getting smaller. On the contrary, businesses like financing and lending, where brokers have scarce resources, can set prices high and still have plenty of customer demand. The trading commissions for futures and options are even lower, but derivatives win by volume, often trading at 10 to 15 times the amount of spot trading. More importantly, when you can integrate spot trading, swaps, and derivatives, along with research services, custody systems, clearing processes, and other services, it forms the foundation of the Prime Brokerage model.

In the world of retail investors, there may not be a clear concept of a "prime broker," but the essential improvement in efficiency is the same: assets are centrally custodied on the same platform, earning passive income through staking products while using positions as collateral for flexible allocation in the derivatives market; by adding opportunities such as airdrops and new token subscriptions, the efficiency of capital utilization can be significantly improved.

Gate, as an exchange that started with spot trading, has long ranked among the top five globally in terms of spot trading volume. However, after encountering a bottleneck in spot trading growth, founder Dr. Han pointed out that our contract product trading volume has not kept pace. Over the past eighteen months, the team has focused on the development of contract products, enhancing liquidity, and optimizing slippage handling, among other key areas. Although we are still some distance from our true goal, in May, Coindesk rated Gate's contract products at 82.6, placing us third globally, with the highest market share growth among all exchanges. The team's efforts have been invaluable.

As always, this is just a good start. In the future, we will continue to develop new features, expand trading pairs, and enhance market depth and user experience. Whether in traditional finance or the Web3 world, the user-centric goal remains consistent; whether in spot trading or derivatives, the underlying logic remains unchanged.

‍#GateSqure# #Gate4Life#