Deri AMA Recap on December 29th, 2023
On December 29th, Deri launched the last Deri AMA in 2023. Let’s watch the detailed & complete AMA recap below:
The AMA Entrance: https://bit.ly/DeriDiscord
OxAlpha: Hello, my dear Deri fellows! Hope you are all doing well. Now let me first summarize the highlights of Deri Protocol this year.
Launch of Deri V4
In November 2023, we launched Deri V4 as the first Layer 3 project, introducing a cross-chain derivatives trading service to all DeFi users. Deri V4 has been deployed on Arbitrum, zkSync Era, Linea and Scroll. In the futures, we’ll expand to more iChains according to community governance vote result.
One month after its launch, DERI V4 has amassed a TVL ～1.6 million, attracted 29,000 users and now offers more than 60 trading symbols.
At the moment, Deri is still the only L3 project tracked on the l2beat website.
The Introduction of Gamma Swap
Launched in its beta version as part of Deri V3, Gamma Swap is designed to optimize capital efficiency. It allows the buyers to gain the Gamma exposure of some underlying asset and the sellers to earn the funding fees by providing that exposure, which can be a useful instrument for managing risks in a volatile market.
Partnership
On-chain Data Summary
In 2023, Deri Protocol’s cumulative trading volume surpassed a staggering 776 million. The platform welcomed over 30,000 new trading addresses, with daily derivatives trades peaking at an impressive all-time high of over 3,600.
Additionally, the year saw more than 7.23 million Deri tokens being permanently burned to the deadlock address.
Others
1.Funding Fee Chart
2.Limit and Stop Order
3.Web2 Integration for Easy Deri Access
4.60+ trading symbols on Deri Protocol.
5.Referral Program
6.Join the Linea Voyage wave 5: Staking and wave 7: Trading
7.Join more than 10+ remarkable live streams to promote Deri to DeFi users
8.….
For more details, read the freshly released Deri Protocol 2023 Annual Report：
https://deri-protocol.medium.com/2023-a-year-in-review-ba49aa7f0788
Now let’s get to the questions!
Q: What is the strategy for onboarding traders and increasing Total Value Locked (TVL)? You suggest people tell their friends, but we all know that this approach doesn’t attract substantial funds. Is there a plan to partner with projects that would deploy liquidity on DERI, or is the strategy to compete with the thousands of projects offering staking/rewards to attract TVL?
A: Well, everything we are doing here is trying to onboard traders and TVL. We are partnering up with a lot of partners. For example, this month Linea Voyage has onboarded many users (traders and LPs). And there are many upcoming events of such. You will see some of them in the coming Jan.
As for that I suggested you tell your friends to use Deri, I didn’t mean this was the only promoting strategy. I was simply saying that this might help too (depending on whether or not you have some friends who trade or are willing to LP). And I was only pointing out one simple: Deri is not owned by me or the dev team, it belongs to the whole Deri community — so you can contribute too. By suggesting you tell your friends to use Deri, I am not asking a favor from you for myself. I am saying this is our common mission so let’s do it together.
And I don’t see why “this don’t attract real moneys”. Deri is delivering great real yield for its LPs (with Deri V4, ~3% for 1 month so far). If you tell your friends about this and they make money from it, it’s a win-win situation, isn’t it?
Isn’t this something nice to share to your friends?
Q: I have been staking DERI on BSC in V3, but now BSC is not available in V4. Will i-chain be available on BSC in the future? When will it become available? Once it is, will DERI staking still be an option?
A: OK, I think I covered this one before. But let me do it again.
First of all, regarding the support of BSC as iChain, this is completely decided by the community. As we speak, we have an on-going DIP10 voting, in which BSC is a candidate. So you can go ahead to vote for it if you are supporting BSC.
However, it looks like there is a confusion that, once BSC is selected as an iChain, then the DERI token will be adopted as a base token on BSC. That’s not necessarily the case.
The V3 pool that you used to stake DERI into was a very special one. In fact, it was an experiment, in which DERI is used as the sole base (and settlement) token so that traders’ profits and losses are all settled in DERI. Going forward, we have no plan to launch such DERI-based-only pools. Instead, DERI will be one of the several base tokens in a mixed pool, just like currently on Arbitrum with V4. However, this setup includes a swapper, standing by to exchange between DERI and other tokens when necessary. Consequently, DERI can only be a base token on blockchains where it’s easily tradable via DEX. Currently, Uniswap on Arbitrum is the only officially supported DEX, making Arbitrum the sole blockchain where the V4 pool supports DERI as a base token at present. Looking ahead, we are open to supporting DERI as a base token on any blockchain where it has substantial DEX liquidity. I’m hopeful that this prerequisite will be met on more and more blockchains.
Nevertheless, if all that you want is a pool where you can stake DERI, then you can do it now — simply bridge your DERI to Arbitrum and then stake into the Deri V4 pool that already takes DERI as base token. Many DERI holders have done this already.
Q: Would you consider allowing users to adjust the roll frequency of options? Currently, the frequency is set to 7 days, which can be costly due to the extrinsic value, currently around 8% per month in funding fees.
A: A good question.
In terms of terminology, I think you are talking about the “funding period” of everlasting options. This parameter was set to 1 day in the beta stage and caused many technical issues. Put simply, the options with 1 day funding period have extremely volatile behaviors that make it impossible to manage. Specifically, funding fees are extremely low when far away from ATM and suddenly become extremely high when getting close to ATM. Consequently, based on the data collected from the beta stage, everlasting options were officially rolled out with a Funding Period of 7 days. As a trader myself, I totally understand that everybody wants to pay less for what they need. But as a product structurer, instead of making one side happy, I do have to make compromises and trade-offs to make the sweet spot for two sides.
From another perspective, this is an issue of liquidity. 1 day options’ extremely volatile behaviors make it naturally less illiquid than other options with longer tenor. This is similar to that, if you trade classical expiring options on Deribit, you would find the 1-day options with horribly bad liquidity. That is, you have to overpay 1-day options if you want to buy it.
It appears differently but is caused by the same reason: options of very short tenor (e.g. 1 day) are very difficult to manage and hence very difficult to provide.
Q: What is the roadmap for 2024?
A: Well, we are still working on that.
I know this does not look like a satisfying answer. But the thing is, we were extremely packed with getting Deri V4 online for the last couple of months so we didn’t have time to work on planning 2024. And obviously, there is no point to plan 2024 without knowing how the kick-off of Deri V4 goes. Even at this point, I can’t say that the kick-off of Deri V4 has completed. We still have quite a few things unfinished, which hopefully will be done in Jan. So I think we will come up with our 2024 roadmap in late Jan or early Feb after we finish the Deri V4 kick-off. Please stay tuned.
Q: Can Deri Protocol discuss integrating Arbitrum One for chain deposits with the currently listed centralized exchanges?
A: We can try to contact them.
Q: In 2024, will you consider utilizing 300,000 ARB? Are you considering launching a new exchange? Are you thinking about introducing new market makers for Deri?
A: For your first question, I think you are referring to the ARB tokens airdropped by Arbitrum Foundation. Those are part of the treasury’s assets and will be used to support the development and promotion of DERI Protocol, just like the other parts of the treasury assets. But we don’t have a plan of using it yet. The Deri treasury is under no financial stress — why such a hurry to spend this asset out?
(If I were you, I would be more worried if the Deri Treasury were in such a hurry to spend it out.)
For the other questions, I don’t have more information to share.
Q: I’m pleased with the concept of everlasting options and have been seeking a perpetual options exchange in the DeFi landscape for some time. Do you plan to add ARB, MATIC, and SOL options?
A: Well, as far as I know, Deri is the only perpetual option shop. And we do want to expand our coverage of underlying assets. Please give us some time
Q: You’ve mentioned in the past that in cases where your account is over-collateralized, you cannot be liquidated in a long call option position (as you have bounded down-side). In theory, if you held a set of options long enough, could the fees effectively bleed the account out, or am I misunderstanding the way the options roll/the way theta has been integrated into the platform?
A: Well, there is a little bit of misunderstanding here: I didn’t mean that a long position cannot be liquidated in any case. What I meant was a long position backed by sufficient collateral will not be liquidated in the worst-case scenario (price moves against you significantly).
Obivously you already pointed out a scenario where a long position could be liquidated. However, essentially in this scenario the condition has already changed — your collateral becomes insufficient due to that “the fees effectively bleed the account out”.
This conversation was in the context of talking about the estimated liquidation price of your positions displayed on the trading panel. Obviously the website would not know how long you will hold your positions. So it can only do a simple thing: estimating the liquidation price based on your current collateral level. That is, the fact your margin balance will be consumed by the funding fees is not taken into account. That’s a little beyond the capacity of this estimator.
Suggestion: Are you considering developing a mobile application for the Deri Protocol? Dydx has a mobile application, and I believe Deri Protocol deserves a qualified mobile application of its own.
A: First of all, thanks for the suggestion.
However, please not e that a mobile application for DeFi is not a simple app but essentially a wallet. Dydx is not a good example here because, for dydx, they have no choice but to provide their own mobile application (i.e. their own wallet). This is because dydx is a stand-alone blockchain. If they don’t provide a wallet for it, people simply cannot use it. So I think the more relevant example here is that Uniswap does have its own wallet.
So, should Deri roll out its own version just like Uniswap does? I don’t know the answer yet. But you raised a good point. I will discuss this internally. After all, developing wallet is not a trivial thing.
Follow-up:
Q: What about integrating a telegram bot?
A: Yes, we have been looking into Telegram bot already. And Yes, you already got the point here. Essentially, telegram bot is some kind of wallet too (wallet = a tool that manages your PK).
Nevertheless, we do think telegram bot is an interesting solution for not-too-serious trading. So we might roll out some telegram-bot-based tools. But personally I don’t think it’s a great idea to use it with a large amount of fund. A wallet that does not require you to provide your PK is always the safest.
Suggestion: From my experience, the funding fee doesn’t seem to effectively balance long and short positions in a reasonable manner. By ‘reasonable’, I mean inducing a switch from long (short) to short (long) due to the funding fee, which depends more on market judgment. Conversely, excessively high funding fees at certain times can hinder trading (it’s already close to options, but options offer a higher yield). Of course, this also represents a form of balance. So, is it possible to adjust the parameters to slightly lower the funding fee?
A: Funding fee is determined by the intrinsic value, which is initially determined by the theoretical fair value and further adjusted by the DPMM pricing algorithm.
Essentially, we are not a seller of options. We are just deploying a protocol to connect buyers and sellers with the price that the algorithm thinks is fair.
Whatever price that you see from Deri Protocol is already the fairest value we can come up with.
Suggestion: Can the PnL simulator adopt an input method? The current drag-and-drop method is not precise enough. For example, I want to see the PnL for a 4% increase in ETH, but I can only drag to approximately 4.11% or 3.95% on the chart.
A: I see the headache here. Thank you for pointing this out. I will pass it to the product team to optimize it.
OxAlpha: Wow, that’s a lot of quesions addressed at the end of the year!
If no more questions, then I will end the AMA and get back to work now.
Then the next AMA is probably in 2024. So I will see you guys in the next year! Wish everyone have a Fantastic New Year!
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.
