Fallacy of trying to extract value from derivative swaps.
In a simple BCH swap contract, trades are mostly executed on a first come first serve basis, but miners can have the ability to replace the most lucrative trades for their own benefit.
There is a growing family of derivative instruments around BCH where folks can speculate on price movements using swaps and tokenized swap contracts, but in a manner where the underlying commodity is never delivered, and where the trades never materially impact the price.
Specifically, General Protocols has developed the general protocol AnyHedge, which let’s users easily enter leveraged-long, leveraged-short and hedged swap positions against various prices, where the settlement occurs in Bitcoin Cash (BCH). It is a suite of cash-settled instruments, where the “cash” is Bitcoin Cash coins. Users can speculate or hedge against various fiat currencies, crypto projects and metals.
A binary cash-settled swap product that paired users with predictions was also developed called gurus, which also used General Protocols’ oracles. Users make price predictions which then get paired into binary swap contracts with counter-parties making a different prediction.
Whiterun LLC has developed a tokenized swap system called Moria which hinges on a dollar price oracle, and a similar offering called ParityUSD is on the way. Tokenized swap positions for any asset could be developed, as long as an oracle and market “authority” existed to derive the price from.
Naively, we might believe there is an opportunity to monitor the disparities between derivative prices and primary market prices and arbitrage those markets, but there is no rule that prevents the primary market makers who drive oracles prices from doing that themselves.
In reality, the predominant liquidity provider and market maker across the six largest regulated centralized exchanges is certainly capable of using permission-less decentralized BCH contracts. They can also easily acquire either rented hashpower or dedicated sha256 mining equipment to execute a trading strategy. They can hire individuals or teams with expertise to build dapps around the BCH ecosystem which will accumulate pools of liquidity for harvest. And they can certainly pay individuals to promote those dapps.
Knowing the game theory of the situation, eventually, derivative markets on BCH will be as tightly controlled as the markets they seek to emulate. There is very little opportunity and a considerable amount of risk in attempting to arbitrage a derivative market with a ten minute blocktime against a fast, well-capitalized primary market player (with access to hashpower).
Although tapswap, cauldron and catdex all offer simple single transaction settlement mechanism, a more mature dex (like jedex) with order aggregation and accumulation ticks could offer better protection and a interesting juxtaposition to simple markets.
With Jedex the design of the exchange introduces deliberate latency, which levels the playing field by shifting all trades several hours into the future. The design is similar to stock exchanges with a speed bump, like IEX which routes all orders through a fiber-optic cable introducing a 350 μs delay.
Before attempting to arbitrage derivatives, it would probably be worthwhile to consider how to level the playing field against a counterpart adept at latency sensitive trades, that also has access to hashpower and considerable resources.
@Hossein 
