Derivatives are complex financial instruments that derive their value from underlying assets and are used for hedging risk, accessing inaccessible markets, and managing price exposure. The derivatives market, the largest by notional value, is split into exchange-traded and over-the-counter (OTC) derivatives, with the latter being more significant in size but less regulated. A major challenge in derivatives markets is the lack of trust, leading to risks such as counterparty risk, inefficiency, and information asymmetry. Chainlink-enabled smart contracts propose a transformative approach by providing automated, trustless solutions that minimize counterparty risk, streamline processes, and enhance transparency. These smart contracts leverage decentralized oracles to connect with external data, improve information parity, lower market entry barriers, and facilitate the creation of decentralized finance (DeFi) products. As derivatives are crucial in managing economic risks, integrating such advanced technologies could mitigate systemic risks and foster innovation by shifting from a centralized trust model to decentralized, data-driven automation.