Continuing our exploration into cash-flow generation across DeFi.
Last fortnight, we covered $dYdX, $GMX, & $GNS, dApps that allow for self-custody, decentralised trading & efficient uptime. There is a reason that these projects are trending, and it is because innovation across derivatives markets is at the forefront of user needs. Options trading has gained popularity in both traditional & web3 markets, and the crypto market has yet to find a leader/leading group of protocols to provide this service to the customer.
These projects have identified two different needs across the market, unique products with non-linear payoffs & the payout of protocol revenue to token holders.
The maturity of derivatives markets & the growth of the Real Yield trend signifies how far DeFi has progressed from its early days in 2018 to now, where market participants have gone from investing in ideas to products that provide actual cash flows.
The same trend is observed across traditional markets, where value & cash flows from utilities, health care & infrastructure are prioritised as opposed to speculative tech stocks.
For this fortnight, three projects named Dopex, Ribbon Finance & Synthetix have been on our radar because of the above traits.
1.Dopex - $DPX
Dopex is a decentralised options protocol whose value proposition minimises losses for option writers.
The critical mechanism lies in their rebate system, which compensates option writers based on their losses for weekly/monthly epochs. Writers receive a token, rDPX, relative to the value of their loss from the option pool.
The tokenomics are designed as follows:
Distributed across five years. This allocation is used to initially handle governance, incentivise the development of community suggestions, help develop the platform with new features, and account for other operational costs.
The farming period is set to 2 years with an initial boosted rewards period of 4 weeks.
Distributed over a period of approximately five years. These rewards will incentivise the use and upkeep of the Dopex platform.
2. Ribbon Finance - $RBN
Ribbon Finance is a decentralised protocol that specialises in providing its users with exposure to DeFi structured products. Its Theta Vault is a yield-focused strategy on 9 separate crypto assets (including $USDC, $SOL, $ETH, $wBTC & $stETH).
The protocol has garnered attention in recent weeks due to the launch of Ribbon Earn, a weekly automated options selling strategy that reinvests premiums into the product. The principal-protected product aims to earn a base APY through lending and use that APY to purchase weekly ATM knockout barrier options.
3. Synthetix - $SNX
Synthetix may not be the latest innovation across DeFi derivatives; however, it is the most successful project across its category and falls within the Real Yield narrative. We wanted to provide our readers with a breakdown of what has contributed to its success, together with the factors that can hinder the performance of the $SNX token.
Firstly, Synthetix is a dApp for synthetic assets. The protocol allows users to gain exposure to underlying assets through Synths without needing a user to own the underlying asset.
The platform offers a staking feature in which $SNX stakers are rewarded with a share of the transaction fees from the DEX. Fees to trade Synths are 30 bps.
Trading Synths requires users to lock up $SNX as collateral to mint $sUSD, which can thereafter be traded in exchange for Synths, essentially borrowing $sUSD with $SNX as collateral.
Since launch, the protocol has transitioned to the Optimistic Ethereum mainnet to aid with oracle latency from Chainlink & reduced gas fees.
*A recent proposal has been made by the founder to cap the supply of $SNX.
The distribution of protocol revenue to users is gaining popularity across DeFi. This article aimed to identify projects that employed this idea and expanded further into the potential headwinds that these projects may encounter with their method of executing this idea.
Nonetheless, innovation will continue across DeFi, notably derivatives, as the market continues to demand a variety of unique products to meet the demands of end-users.
[online] Available at: <https://coin98.net/> [Accessed 26 August 2022].
- Dopex. [online] Available at: <https://docs.dopex.io/> [Accessed 26 August 2022].
. [online] Available at: <https://dune.com/synthquest/snx-escrow-release> [Accessed 26 August 2022].
. [online] Available at: <https://grafana.synthetix.io/d/pjPJZ6x7z/synthetix-system-stats?orgId=1&kiosk=full> [Accessed 26 August 2022].
Nansen - Crypto,
DeFi & NFT Analytics. [online] Available at: <https://www.nansen.ai/> [Accessed 26 August 2022].
| Fundamentals for crypto. [online] Available at: <https://tokenterminal.com/terminal> [Accessed 26 August 2022].
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