Divergence

Divergence Protocol (DIVER) is a non-mining cryptocurrency that was first launched on September 13, 2021. This uses the N/A algorithm and the N/A coin proof type. Divergence Protocol has a circulating stock of 55,702,603 coins and a total market capitalization of $5,400,926, which values it at position 1433. The Divergence Protocol rate is now $0.09894 with a 24-hour trading volume of $138,753. The Divergence Protocol rate reached $0.45 at an all-time high on October 18, 2021. The Divergence Protocol rate has increased by 0.63% over the past 24 hours and tends to move up by 1.58% in accordance with the transactions of the last hour. Also, the Divergence Protocol rate is reduced weekly by -11.35%. When we look at the change in the Divergence Protocol rate on a monthly basis, it decreases by -34.50%, whereas it increased by 2.28% in accordance with its rate 1 year ago. You can find information about divergence protocol technical analysis and divergence protocol course forecasts below. Moreover, the detailed divergence protocol diagram provides you with valuable comprehensive data. You can click on the Exchange Platform link directly to buy or sell Divergence Protocol (DIVER) or other coins easily .

Divergence (DIVER) is a decentralized hedging, DeFi asset volatility trading platform whose flagship product is an AMM-based marketplace that trades synthetic binary options.

Currently, there are no efficient, easy-to-use and universal solutions for trading and hedging the volatility of assets that exist at different levels of DeFi applications, where users are exposed to several sources of risk at the same time.

When it comes to price risk management, existing decentralized futures and perpetual products offer linear risk on a limited number of underlying assets. On the other hand, options, being a less developed product, can provide a non-linear risk and reward structure. This allows option traders to create leveraged positions in assets at a lower cost than making a direct trade.

To fill this gap, Divergence is developing a range of decentralized volatility derivatives and volatility index products to provide a platform for:

-Risk averse users seeking to hedge volatility risks

-Risk tolerant users looking to trade and profit from volatility

-Risk-neutral users seeking to participate as liquidity and fee providers

The extensive set of derivatives for volatility in the Divergence Roadmap contains financial instruments including binary options, index derivatives, and yield stores that include volatility trading strategies. Our first step is to create a user-friendly, rapidly scalable product that directly addresses the needs of liquidity providers and traders in the DeFi ecosystem:

an AMM-based marketplace that trades synthetic derivative tokens with a binary payout structure based on the volatility of any asset class defined by LP. (also known as binary options)

Key design features of this AMM marketplace include:

-Composable: Markets can be created at strike prices and expiration cycles of choice using any fungible token, including DeFi assets issued by other protocols, in a one-step seed and mint process, which means you don’t have to mint the derivative token first. and then allocate funds to fill the pool.

-Capital Efficiency: Only one provisioning is required to write the binary query and binary path for the pool without the need for excessive provisioning. Once a pool is created, the same collateral is used when traders buy and sell options through that pool. Only one collateral is in use for each pool at any given time. The smart contract reserves the maximum amount of collateral requirements, giving LP the flexibility to withdraw capital before it expires.

-Continuity: By default, our binary options merge auto-execute positions and automatically roll over liquidity at expiration using identical terms and conditions. LP would not have to move capital to create new pools to manage option expiration cycles.

Consider an average liquidity farmer - Joe, who provides ETH in Compound to borrow USDC, which he uses to provide liquidity to the USDC-WETH pool on Sushiswap for the SUSHI farm. After he starts earning SUSHI, he restores SUSHI to get more rewards.

By now, Farmer Joe has a lot of “skin in the game” when it comes to DeFi volatility – he is simultaneously exposed to multiple sources of risk that any liquidity farmer can face, including but not limited to:

1. Unstable interest rates on credit protocols. Today, most lending protocols offer variable interest rates that automatically adjust based on the supply and demand of any given pool of assets.

2.Volatile wagering rewards. Staking offers an additional source of income for token holders. While it sounds “passive,” it is by no means a fixed income. On the contrary, betting returns can be quite volatile and depend on many unpredictable factors.

3.Unpredictable asset price trends. As a general rule, liquidity providers on the DEX tend to incur intermittent losses due to underlying asset price volatility, especially during periods of significant market imbalances in one of the assets provided as liquidity.

Despite the explosive growth of on-chain trading applications, today there is a general lack of effective tools for simultaneously managing multi-dimensional risks at different levels of underlying DeFi assets. More often than not, liquidity providers have to divest part of their liquidity positions and/or allocate additional capital to hedge part of their exposure. In some cases, they will even have difficulty finding a compatible hedging product.

Using the previous example - in order to ensure that he earns a steady income from placing SUSHI, our farmer Joe will first need to carefully calculate the hedging factor for the amount of SUSHI he is going to receive. It then uses the portion of the SUSHI and/or stablecoin it already holds to create a hedging position on a centralized exchange where meaningful SUSHI perpetual/future liquidity exists. In addition to the cost of this transaction, our farmer Joe would have to pay for the opportunity cost of withdrawing that amount of SUSHI and/or a stablecoin that he could use to harvest on-chain.

Hedging the inherent risks of DeFi in Divergence is facilitated by using any fungible assets as collateral to record and trade binary options at strike prices and expiration dates of your choice.

Thanks to Divergence, Farmer Joe can now purchase an option with xSushi. In addition to being a versatile hedging tool, divergence also offers traders the opportunity to access the synthetic volatility of decentralized assets that do not have publicly available derivatives offerings. It also opens up a new category of returns for liquidity providers, who will have access to a volatility premium on top of existing lending and farming returns.

Divergence focuses on inclusiveness while creating derivative products that exploit the volatility of the ever-expanding universe of decentralized assets. We have set ourselves the task of providing dynamic creation of many derivatives based on various financial risks available in the market today.

Binary options are key to this initiative for the following reasons:

1. non-linear exposures. Unlike futures products, options provide a non-linear risk and reward structure that allows option buyers to create leveraged positions in assets at a lower cost than making a direct trade. It is possible to create a portfolio of binary options consisting of various volatility risks for various DeFi assets, many of which are not yet found in options markets on centralized exchanges.

2. Simple mechanism. Binary options have a desirable pricing mechanism that allows a predetermined constant number of tokens to be exchanged at expiration between buyers and sellers. In divergence pools, the payoff for a binary option token at expiration is either one collateral if the strike price is reached, or zero if not. The price of a binary call option and a binary put option is indicated in units of collateral and always equals one collateral. This is significantly easier for retail users, who may find it difficult to account for the risk reward of simple vanilla options without the additional complexities of working with a decentralized protocol.

3. Building blocks for higher order derivatives. A functioning options market should reflect the market's expectations of future price movements, which are valued against its implied volatility. In order to be able to create a higher order derivative product, i.e. VIX-equivalent volatility indices and index derivatives, it is necessary to obtain real-time prices from decentralized option pools for different number of strikes and maturities. While the smart contract environment is clearly different when it comes to creating higher-order financial derivatives, it is still necessary to allow decentralized market participants to determine the price process, which can then serve as the basis for volatility index derivatives.