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Deri Protocol the full-featured decentralized exchange for trading perpetuals

Deri Protocol the full-featured decentralized exchange for trading perpetuals

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Deri Protocol was founded with the objective of creating a tool that allowed for real DeFi, derivative trending, composability, and openness in the blockchain ecosystem.

Derivatives are one of the hottest types of contracts in traditional and crypto markets due to the level of abstraction they allow investors by mimicking the performance of underlying assets.

This characteristic of derivatives has made them extremely popular in the crypto ecosystem as it expands the use of tokens while being live on 3 chains(BSC, HECO, ETH) to allow trading on the blockchain.

While centralized exchanges (CEX) offering crypto trading services have implemented features intended to facilitate the exchange of risk exposures but they are unable to directly interact with on-chain activities and platforms, as they are no part of the networks themselves.

As an introduction of the DeFi way to trade derivatives, Deri Protocol V1 has been live and running smoothly since early 2021. With the rollout Deri Protocol V2, a state-of-art DEX has entered the crypto-sphere. Prior to launching Deri Protocol V2, security audits from two well-known agencies i.e Peckshield and Certik were carried out to avoid any threat of direct protocol vulnerabilities. 

Along with all the features of V1, Deri Protocol V2 introduces:

  • A. Dynamic mixed margin
  • B. Dynamic liquidity providing
  • C. Multiple trading symbols in one pool

With these features, the derivative trading on Deri Protocol can achieve an optimal capital efficiency, which is potentially higher than that of centralized exchanges such as BitMEX. 

Dynamic mixed margin

Deri V2 implements a margin system accepting multiple base tokens and stablecoins. With such a system, a trader could choose one or more from the supported range of base tokens to post as margin. 

With the constant volatility, traders might often find their position has been already liquidated due to the inability to add stablecoins to their position; which Deri Protocol V2 solves by offering Dynamic mixed margins. Traders no longer need to use a spot exchange first to get the position base asset. All supported base tokens on Deri Protocol V2, can be used to extend $BTC margin position. This results in extreme capital efficiency as a consequence. 

Dynamic liquidity providing

Just like on the trader side, Deri Protocol V2 also allows liquidity providers to choose one or more from the supported range of base tokens to provide liquidity. Also just like the margin value, the provided liquidity provided is dynamic too.

Deri Protocol V2 instead, allows users to add several different assets as liquidity into the same pool. By keeping the given liquidity dynamic in Deri Protocol v2, tokens that can otherwise hardly be traded due to a lack of liquidity like we see on exchanges of all kinds, benefit from the depth of mixed, shared liquidity. This strengthens the accessibility, and the efficiency to trade and provide liquidity.

Multiple Trading symbols in one pool

Another new feature introduced in Deri Protocol V2 is that multiple trading symbols (i.e. underlyers) could be traded in one pool. This is to further enhance the capital efficiency since the trades of different symbols are sharing the same liquidity hub. The correlation between the price movements of the trading symbols determines the degree of capital efficiency improvement.

The less correlated the price movements are, the higher capital efficiency the pool can achieve. Please note this is something unimaginable in the traditional order book-based trading paradigm since an order book is always for one specific trading symbol and there is no chance two or more symbols can share liquidity.

The new LP token as NFT

LP token in Deri is denoted as LToken. Since a liquidity provider can choose from one or more of the supported base tokens as liquidity to provide to the pools of Deri V2, all LPs’ contributions are heterogeneous and thus can no longer be represented by fungible tokens. Instead, non-fungible tokens (hereinafter referred to as NFT) are adopted to implement LToken.

With the cryptocurrency space continuing to grow by the day as new projects emerge to fulfill the needs of crypto enthusiasts, new projects require the support of investors and partners to have a real impact on the market.

As so, Deri protocol has partnered with other blockchain projects to improve the efficiency of the platform and collaborate with each other. These 3 firms are heavily centered around DeFi and include Polygon, dForce, and Autofarm.

The project also has the support of multiple investment funds such as GSR, FBG Capital, Bixin Ventures, Lotus Capital, and Black range, all of them with years of experience in the industry.

Conclusion

Deri Protocol is aiming to revolutionize the way that derivatives can be used in the cryptocurrency ecosystem by improving interoperability and automation, something of increasing importance at a time when more networks and protocols are gaining traction.

The upcoming changes to the Ethereum network that will come with a Polygon integration will also further enhance the scalability of the network while attracting more investors that will certainly benefit from a platform specifically designed for the trading of derivatives.
By taking advantage of the benefits of NFTs and applying them to derivative trading, Deri protocol could easily be integrated into other projects in the DeFi industry, which is expected to continue growing in coming years as crypto adoption is on the rise.

For more information, visit defi.finance

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