A Deep Dive into the Deri V4 Architecture

Deri Protocol
3 min readSep 14, 2023

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In our previous posts, we provided a brief introduction to Deri V4’s i-chain and d-chain architecture. In this article, we aim to explore these components in greater detail, making it understandable for users, including liquidity providers (LPs) and traders. We’ll demystify the flow of information and actions between i-chains and the d-chain, all while highlighting the robust security measures in place.

Let’s start by revisiting the fundamental concept: i-chains are the requesting interfaces for users while d-chain processes the requests from all i-chains. When you use Deri V4, you interact with i-chains and don’t need to worry about the technical details.

Now, let’s dissect Deri V4’s architecture from a user’s perspective, making it straightforward for anyone to grasp.

For Liquidity Providers

Meet Alice, a liquidity provider. Adding liquidity to i-Chain 1 (which could be, e.g. Arbitrum, BNB Chain, zkSync Era, or zkEVM, etc) is a breeze for her. She initiates the “add liquidity” request on i-Chain 1, and that’s it. If Alice wishes to remove USDC, she simply requests “remove liquidity” on i-Chain 1. The following figures illustrate the interaction.

For Traders

Enter Bob, a trader. The processes of adding and removing margin is shown in the following figure.

If Bob aims to short BTCUSD, he initiates the trade on i-Chain, and the request action is likewise relayed to the executive engine for processing.

Security

Security takes the utmost priority within Deri Protocol, integrated into every facet of Deri V4.

i-chain Security: The security of i-chain part, where the requesting interface of Deri V4 deploys, is ensured by the layer 1 or layer 2 of the i-chain.

d-chain Security: d-Chain will launch as an App Layer 3. Specifically, it’s an Orbit Chain settling to Arbitrum One. As far as security is concerned, it’s ensured by the underlying blockchain, i.e. Arbitrum One, whose security is ensured by the underlying Ethereum. So eventually, d-Chain has the same security as Ethereum, through 2 layers of optimistic roll-ups.

the iChain-dChain communication: the two-way communications between i-Chains and d-Chain are ensured by two validating services.

Smart Contract Security: As the core transaction process remains largely unaltered in current version, in V4, our focus on security revolves around architectural adjustments. Our smart contracts will undergo rigorous third-party audits, and we will be introducing a dedicated Bug Bounty program specifically tailored to V4. This multi-layered approach ensures the highest level of security for our users and their assets.

About Deri Protocol

Deri, your option, your future!

Deri is the DeFi way to trade derivatives: to hedge, to speculate, to arbitrage, all on chain. With Deri Protocol, trades are executed under AMM paradigm and positions are tokenized as NFTs, highly composable with other DeFi projects. Having provided an on-chain mechanism to exchange risk exposures precisely and capital-efficiently, Deri Protocol has minted one of the most important blocks of the DeFi infrastructure.

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Deri Protocol

Deri Protocol = (Perpetual Futures + Everlasting Options) x Decentralized.