DeFi Futures, perpetual contracts & derivative trading
In this update the iYield Team is bringing you an announcement that will shake the world of DeFi to its deepest depths. We have held this ace up in our sleeves for a while but it is time to present it to the world. Previously we have stated we will provide value and create demand for our tokens and this is once again delivering in that regard.
DeFi futures akin to traditional futures on Kraken, BitMEX or Binance
Anyone coming to the Yield Bank platform owning yB will be able to trade futures contracts. These contracts will be centered around the DeFi model Uniswap has propelled to the forefront of the cryptocurrency space. You will be able to place a perpetual futures contract on price movements of the biggest assets in the space such as BTC or ETH among many others. This should eventually be expanded into real world commodities such as gold, oil etc. as well as longing and shorting stocks or indexes through our derivatives using our platform in a completely decentralized, permissionless manner.
Using the AMM model Uniswap is using for regular trading, enabling low slippage decentralized trading through liquidity pools anyone can put their money into, we have gone and not only applied but extended that same concept to trading of derivative financial products.
Okay, so we have enabled our users to trade using derivative contracts. Pretty standard in 2020, right? So what’s different?
Users will be able to provide the leverage liquidity needed and place futures orders in a completely decentralized manner, but instead of the CEX keeping the profits of the losing trades, the Leverage LIquidity Providers will receive the profits in proportion to the size of Leverage Liquidity provided.
No rewards token. No staking and farming.
Just pure profits from a virtually riskless Leverage Liquidity position taken.
First, let’s look at it from a trader’s perspective — a person who comes into our platform and places an order through our future’s contracts. Their order goes to the market and their money is going to the Liquidity Leverage Pool. Since they are hedging against the money leverage providers put into the pool, there is no need for a direct exact counter-party for this trade to execute smoothly. Should the user win his trade, he will be given back his original amount + profits made - this money is taken from the leverage liquidity pool. Should the user lose the trade upon closing or get liquidated, the money will simply stay in the leverage pool. Additional leverage will also be given to users placing their perpetual contract positions with any Yield Bank platform tokens.
Secondly let’s look at it from a liquidity provider’s perspective, which could in this case also be called leverage provider as stated above. A leverage provider comes into our platform and provides leverage liquidity for the traders to execute their future trades upon. He is in turn rewarded with fees from every futures contract that was made as well as earning a portion of the losing orders and liquidated future’s contracts. Leverage providers will not be exposed to any of the risks of high-leveraged derivative trading as they are simply providing liquidity for this process to take place. Traders coming into our platform longing and shorting either with or without leverage then bear all the risk in this regard. Further risks of impermanent loss will be minimized to the leverage provider as its assets required will be pegged to stablecoins through the Yield Bank platform. Additional rewards will be available for users providing leverage liquidity with any Yield Bank platform tokens.
We have created a completely decentralized version of BitMEX where an everyday crypto trader can come in and provide liquidity i.e. leverage liquidity for these derivative trades to take place and be rewarded proportionally for doing so akin to traditional liquidity mining on Uniswap.
That all sounds awesome! But how does this bring value to the yB token?
Users looking to be leverage providers will be given the option to purchase yB and provide liquidity using yB alongside a stablecoin. The ratio should be something close to 90% of a stablecoin and 10% of yB but this is subject to change. This should result in a steady, strong buy pressure for yB from the open market as it would introduce a lot of organic demand from people looking to be leverage providers on our platform. The incentive for doing so are added bonuses such as higher percentage of rewards or the ability to use bigger leverages for your trades.
For our risk-averse investors looking to be leverage providers with minimal risk of impermanent loss or losing money through the price swings of the underlying assets they chose to provide liquidity with, there will be an option available to provide leverage liquidity using stablecoins only.
This will turn our futures trading product on the platform into a very safe passive semi-fixed income tool which will inevitably propel us to the top ranks of not just DeFi, but cryptocurrency as a whole.
After the platform has established itself, we will also make it an option to be a leverage provider using major asset + yCASH to drive similar demand towards our rewards token and reward our holders and investors.
Raising initial leverage liquidity
The current plan is to have a separate Liquidity Episode specifically for leverage providers to launch our initial leverage liquidity pool. Users will be incentivized to participate in each of our Liquidity Episodes through various bonuses we will offer — these will be specified in advance before the Liquidity Episode happens. This serves both as an incentive and a reward to our early supporters as additional users coming in after the initial Liquidity or Leverage Episode will be not eligible to claim any of these bonuses when providing liquidity or leverage liquidity.
Follow us on any of our social media accounts listed below to stay updated. Liquidity Episode date will be announced in the coming weeks.
The article and any other associated content of Yield Bank does not constitute as financial advice. Cryptocurrencies are a high risk investment and may not be suitable for all members of the public and all types of investors. This is an experiment in DeFi yield aggregating to bring longer and steadier yields to its users.
Next article coming up: LP tokens market