Derivative

Derivative means generally a financial exposure to movements of an index (predominantly but not exclusively price), but without necessarily ownership of the underlier to which the index refers. They therefore price risk, and enable all risks to be compared. Derivative contracts differ according to the sort of exposure attached to an index. In other words derivatives are contingent claims. They open a temporal gap in which something may happen, and their value depends then on what happens in that gap. ECSA is moving from a definition of derivative as a “self-executing contract that reduces counterparty risk” (Ethereum white paper) to understanding a derivative as a sensitivity to changes or a relationship between co-text and context: we understand derivatives as an ongoing ability to isolate co-text from context, to turn co-text into something useful for measuring. This is a very different sense of “smartness” in derivatives. We think they have a social logic. See Social Derivative. And Ben Lee: Token as a Derivative and a Gift.