a16z argues blockchains can expand the supply of financial markets

A new analysis published by a16zcrypto.com argues that blockchains could transform finance by making it far easier to create and distribute markets. Its central claim is that financial systems have historically struggled less with a lack of trading interest than with the difficulty of supplying new markets.

The analysis describes markets as tools for moving risk between participants. A trade allows two parties to accept different exposures at an agreed price. From that perspective, financial innovation has generally progressed by finding new ways to trade existing risks or by making previously untradeable risks into market instruments.

According to the article, blockchains alter the economics of that process in two ways: they allow markets to be issued without permission from a central listing authority, and they make distribution global. The result, it argues, could be a rapid increase in the number of markets available to traders.

Financial markets have expanded slowly

The article places this argument in a long historical sequence. Grain was traded in spot markets for thousands of years before futures were listed in Chicago in 1865. Currency futures followed the move to floating exchange rates in 1971, with contracts introduced in 1972. Equity options became a listed market in 1973, after centuries in which they were mainly arranged privately by dealers. Exchange-traded funds did not appear until 1993.

The development of entirely new kinds of risk exposure was slower still. Interest rates became broadly tradable in 1981, while credit default swaps provided a market for default risk in 1994. Volatility gained a major derivatives market through VIX products in 2004. Prediction markets later made discrete events, such as elections and policy decisions, tradable outcomes.

The analysis says potential demand existed well before these products were created. Farmers needed ways to protect harvest income before organised grain futures; creditors wanted to manage the possibility of default before credit derivatives. In this account, the limiting factors were listing processes, legal frameworks, geography and the challenge of finding counterparties.

Blockchain-based markets are presented as a response to those constraints. Permissionless issuance removes much of the traditional gatekeeping, while online distribution allows participants from different locations to reach the same venue. The article stresses that this does not mean every new market will succeed. Instead, unsuccessful products can disappear while demand determines which ones attract liquidity and survive.

Crypto’s markets for new risks

The analysis links many prominent crypto categories to this model. Perpetual futures, decentralised spot exchanges, lending platforms, prediction markets, memecoins, non-fungible tokens and tokenised physical assets are all described as either creating new risk exposures or introducing new mechanisms for trading existing ones.

Prediction markets, for example, give discrete events a price that can change as information develops. Peer-to-peer lending turns an individual borrowing relationship into an exposure with an ongoing market price. Pre-IPO markets extend access to shares that were previously available mainly through a small group of secondary brokers. Memecoins and NFTs are presented as markets for less conventional forms of risk, including attention and cultural relevance.

Crypto has also produced alternative trading structures. Automated market makers can support a market before a traditional market maker commits to quoting prices. Perpetual futures replace an expiry date with a funding mechanism, allowing traders to maintain exposure through a continuing contract. Binary contracts turn an event into a payment of either zero or one dollar, while pooled lending replaces individual loan negotiations with shared liquidity and a utilisation-based rate.

Bonding curves combine an asset’s issuance with its price discovery, allowing trading to begin with the first buyer. The article says these mechanisms reduce the coordination needed to establish a market, although they also expose participants to the risks created by thin liquidity and untested products.

Perpetual futures are presented as the clearest example of the broader thesis. Since they are synthetic instruments, the main requirements for listing a new contract are a dependable oracle and traders prepared to take opposing positions. That makes it possible, in principle, to offer leveraged exposure to a wide range of assets or indicators.

Onchain trading moves beyond crypto

The analysis identifies Hyperliquid as an important example of this model. Its HIP-3 and HIP-4 systems allow users to launch derivatives, use the platform’s global interface and earn from the markets they create. Lower issuance costs, the article argues, can increase the number of available products and leave traders to determine which become successful.

The article says this process is increasingly visible in markets linked to real-world assets. In July, onchain real-world-asset perpetual futures reached a stated annualised pace of $1.4 trillion in volume and represented half of Hyperliquid’s trading book. Equities, oil and memory stocks are cited as examples of existing risks being paired with a new, continuously available trading format.

It also says the leading sources of new volume have changed over time. US equities and commodities led in the fourth quarter of 2025, followed in the first half of 2026 by oil, gas and metals. More recently, semiconductor and memory-stock markets were identified as the strongest areas.

The wider significance, according to a16zcrypto.com, is that 24-hour blockchain markets may begin to influence price discovery itself. During an oil shock in February, the article says, WTI found price discovery on trade.xyz while CME was closed. It also points to pre-IPO markets for Cerebras and SpaceX, claiming their prices were close to the eventual opening levels.

The analysis concludes that the future market universe may extend beyond today’s asset classes. It names commodities and foreign exchange perpetuals, indices, round-the-clock equity exposure, compute futures, inflation indicators, music, social trends and sports as possible areas for development, provided they can be measured and matched with willing buyers and sellers. In its view, the protocols that create these markets and the venues that bring traders together will be positioned to capture the resulting value.