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Deri Protocol

Deri Protocol

Deri is a decentralized derivative exchange protocol

What is Deri Protocol?

Deri is a decentralized derivative exchange protocol that allows its users to exchange risk exposures with a high degree of precision and capital-efficiency by tokenizing risk exposures into Non-fungible Tokens (NFTs).

These NFTs can be easily imported into other decentralized finance (DeFi) projects, creating a whole new myriad of use cases and investment strategies catered to the specific needs of every investor.

Deri Protocol runs in the Ethereum Blockchain as a group of smart contracts that allows the exchange of risk exposure entirely on-chain, while also using oracles to ensure precision in the values.

The use of the Ethereum network grants the protocol immediate access to the biggest DeFi ecosystem and allows the minting of ERC-20 tokens to tokenize positions which can then be used in it.

Deri Protocol (DERI) - risk sharing

Deri Protocol (DERI) is a decentralized protocol that allows users to share risk accurately and efficiently. This is DeFi's way of trading derivatives: hedging, speculating, arbitrage, all on-chain.

This is achieved due to the fact that liquidity pools play the role of counterparties for users. With the Deri protocol, risk exposure is tokenized as non-fungible tokens (NFTs) so that they can be imported into other DeFi projects for their own financial purposes. By providing an efficient network mechanism for sharing and holding risks, Deri Protocol has created one of the most important building blocks of the DeFi infrastructure.

Although there are already derivative solutions for crypto, most of them are either centralized or insufficient to meet the needs and requirements of potential DeFi customers. Simply put, the ultimate solution for risk sharing in the cryptocurrency world should be something original and organic on the blockchain. And that's exactly what Deri Protocol stands for.

Finance, a derivative is a contract whose value is determined by the performance of the underlying enterprise. This underlying entity may be an asset, an index, or an interest rate, and is often simply referred to as the underlying or underlying entity.

Derivatives can be used for a number of purposes, including insurance against price fluctuations (hedging), increasing exposure to price fluctuations for speculation, or gaining access to assets or markets that are otherwise difficult to trade.

Some of the most common derivatives include forwards, futures, options, and swaps.

The economic essence of a derivative instrument is that the user acquires certain risks accurately and efficiently.

Why do we need a decentralized protocol for derivatives?

Risk exchange is one of the main functions of finance, along with borrowing and lending, spot exchange, etc. Blockchain as a financial infrastructure requires an on-chain mechanism for this.

In fact, centralized exchanges (CEXs) of crypto derivatives have been serving the purpose of exchanging risk in the crypto world for some time now. However, since CEX is not an organic part of the blockchain, it cannot directly interact with other actions on the chain (such as transactions). Therefore, while CEXs may partially serve their purpose as a plug-in for the decentralized finance (DeFi) ecosystem, they cannot play the role of an intra-chain (decentralized) exchange mechanism. And for the same reason, while hybrid solutions (partly on-chain, partly off-chain) do have added value for specific scenarios, they may not be the ultimate solution for DeFi either.

Simply put, the ultimate solution for risk sharing in the crypto world should be something original and organic on the blockchain.

Derivative DEX vs. CEX

Since centralized exchanges (CEX) of cryptocurrency derivatives already partly serve this purpose, comparing the two helps to understand the decentralized exchange (DEX) solution. However, note that this is actually a comparison of two different beings: while DEX and CEX partially serve the same purpose, they are fundamentally different in nature.

What do we need for DEX derivatives?

We now summarize the attributes that are required for a decentralized derivatives exchange mechanism:

True DeFi: the core of the exchange mechanism must be entirely on-chain;

Real Derivative: It should allow users to accurately and capital-efficiently take the risks they want;

Buildability : The key component must be tokenized so that it can be imported into other DeFi projects such as lego blocks;

Openness: The solution should use generic tokens (like stablecoins) as the underlying token, rather than using some kind of "internal chips".

Also, while simplicity is not a defining attribute, it is also critical to how the solution works. A decentralized derivatives protocol should be as easy to use as a spot exchange like Uniswap.

What is Deri Protocol (DERI)

Deri Protocol (DERI) is short for derivative. As the name suggests, the Deri protocol helps people trade derivatives. Essentially, the Deri protocol is a

decentralized protocol that allows users to exchange risk. As a SOLUTION for decentralized derivatives exchange, the Deri protocol is inherently designed with all the defining features of DeFi and financial derivatives in mind.

Real DeFi: Deri Protocol is a group of smart contracts deployed on the Ethereum blockchain where the risk exchange takes place entirely on-chain.

Real Derivative: PnL of user positions is calculated with the mark price updated by the oracle to ensure accuracy; Positions are supported by margin, which provides built-in leverage.

Compatibility: Positions are tokenized as non-fungible tokens (NFTs) that can be held, transferred, or imported into any other DeFi projects for their own financial purposes (like blocks in their own “lego game”).

Open: Anyone can run a pool with any underlying token (but usually a stablecoin like USDT or DAI). That is, the protocol does not require the use of any particular "internal chip".

Simplicity: The Deri protocol uses an extremely simple trading process.

What makes Deri Protocol so special?

As a decentralized derivatives exchange solution, Deri Protocol is designed with all the defining features of DeFi and financial derivatives in nature.

Real DeFi: Deri Protocol is a group of smart contracts deployed on the Ethereum blockchain where the risk exchange takes place entirely on-chain.

Real Derivative: PnL of user positions is calculated with the mark price updated by the oracle to ensure accuracy; Positions are supported by margin, which provides built-in leverage.

Combinable : Positions are tokenized as non-fungible tokens (NFTs) that can be held, transferred, or imported into any other DeFi projects for their own financial purposes (like blocks in their own “lego game”).

Open: Anyone can run a pool with any underlying token (but usually a stablecoin like USDT or DAI). That is, the protocol does not require the use of any particular "internal chip".

Simplicity: The Deri protocol uses an extremely simple trading process.

Interoperability: The $ Deri token is interoperable and supports three different blockchains through our unique Deri cross-chain bridge. (Ethereum, Binance Smart Chain and Huobi Eco Chain)

Dynamic Mixed Margin: Allows traders to select one or more of the supported underlying tokens to post as margin.

Providing dynamic liquidity: Allows liquidity providers to select one or more of the supported base tokens to provide as liquidity.

Multiple trading symbols in one pool: Supports multiple trading symbols in one pool

Key Roles

Our ecosystem is an entity made up of many key contributors and key roles, each with an important task.

-Liquidity providers provide liquidity to pools to receive transaction fees, funding fees, DERI rewards, etc. and therefore play the role of a counterparty to traders.

-Arbitrageurs are a special type of trader who are attracted to funding fee arbitrage to balance the two sides of a long and a short position.

Liquidators Position: When a position violates the liquidation line, the liquidator can pay gas to liquidate the position and share a portion of the position's remaining margin as a fee.

Timeline

Patents

Further Resources

Title
Author
Link
Type
Date

🥇 Web3 Payments by DePay - Accept any token - Multichain

Web

DePay - Medium

Web

February 1, 2022

DePay price today, DEPAY to USD live, marketcap and chart | CoinMarketCap

Web

Deri Protocol

Web

June 23, 2021

References

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