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In recent months, some cryptocurrency firms have begun touting structured products linked to the price of bitcoin, with complex formulas determining how much they pay out. It is still a small market, and the firms say their products aren't aimed at mom-and-pop investors. But the trend is raising red flags among some market veterans.

Opium Finance has released collateralized debt obligation products (CDOs) for Compound Finance's automated lending markets. Opium is a decentralized finance (DeFi) protocol that allows for creating, settling, and trading decentralized derivatives. Compound Finance is an algorithmic, autonomous interest rate DeFi protocol that allows for the creation of money markets on the Ethereum blockchain. Investors can put up the Compound debt token cDai - and soon Uniswap tokens - to diversify exposure to DeFi lending markets. Opium's product pays out structured returns to both a senior and junior risk tranche in exchange. The former tranche offers a 7% fixed return on DAI (a crypto-backed USD-pegged stablecoin) at maturity, while the latter pool offers a variable rate paid out after filling up the senior tranche's return.