On Friday, Sep 16th, Deri launched a Discord AMA with Deri’s co-founder, 0xAlpha. In this AMA, the community’s all questions & suggestions piled up during the time were be answered & fed back.
The AMA Entrance: https://discord.gg/dQyuBkBKBe
Let’s watch the detailed & complete AMA recap below:
OxAlpha: Hello everyone~hope you guys are doing well, Deri fellows! I am starting with the questions here then.
Q1: Is there a plan to launch BNB options?
A: We are working on this. It’s as simple as the BTC and ETH options tho.
Right now the most the critical part for BNB option is the volatility. You might have seen I posted an proposal for online algorithm of realized vol, which was preparing for the Vol components of such options.
Q2: When gamma swap?
A: We are working on that too. It might be rolled out in a couple of months. Don’t take it as a promise tho, as this is complete innovation (first ever in the financial history), for which there is no way to set timeline.
Q3: I’ve been wondering for a long time, is there any discount factor depending on the amount of Deri held by traders? Like other exchanges, for example, Dydx, Binance exchanges?
A: We are considering and discussing such a mechanism. However, regarding whether it’s worth doing so, we have not come to a conclusion yet.
Regarding your comparison with dydx and binance, please note the following difference:
Dydx and Binance are both centralized exchanges. The transaction fees on such centralized exchange are paid to the team/organization. So essentially the discount on such exchanges means the team will cut less from the cake and leave more on the table for the token holders. Whereas, Deri Protocol is DeFi. We the team don’t take one penny from the transaction fee whatsoever. 20% of the transaction fees go to the LP while 80% are used to burn DERI (directly benefiting DERI holders). So the discount would mean less transaction fees go to LP and less are used to burn DERI.
That being said, I am not concluding that such mechanism is worthless for Deri. It’s still an open discussion. So, please share more of your thoughts on this. We are all ears!
Q4: Query about security of users fund. How much does it secure? If anything bad happens, what will your 1st action to users fund?
A: I assume “users fund” refers to the LP-provided pool fund, and “anything bad” refers to loss due to accidents/attacks.
The whole Deri Protocol is running on top of the security of the fund, which means the security of the fund is the №1 priority of our work. Thanks to the team’s ability on smart contract security, Deri Protocol has been running securely for more than 1.5 years.
Q5: The page should look clear: no lock periods, no penalties and fee 0.1% on deposit or withdraw. This would help a lot on the UX
What happens when the price reaches 25k or 20k? The contract is over and we have the option to enter another one or let it go on?
A: Regarding your suggestion “The page should say clearly, no lock periods, no penalties and fee: 0.1% on deposit or withdraw…” I like it. I think it helps with the transparency. I am forwarding this to the product manager.
Your question is regarding the market risk borne by the pool (LP fund). The core design of Deri Protocol is the funding fee mechanism to induce a balance between the long and short sides so that the pool has very small net exposure. And this mechanism has been well proven in practice. Just look at the performance of our longest time pool, the Main Pool on BNB Chain.
Q6: I’m not sure these everlasting options make any sense guys, is there any chance to improve them? It honestly is too expensive IV on Weth, USDC, like 65% right now, these options are priced like its 120%+
A: Well, since you didn’t mention which option (strike and c/p) you were talking about, I can’t discuss specifically on the correctness of the option pricing.
However, a very obvious thing is that, if you (or the market) think some options are overpriced (too expensive), why don’t you (or the market) just short it? you will make profit from your judgment if you are right. One thing you should keep in mind is that, while the DPMM does calculate a theoretical price for all the options, the market prices are all results of trading, i.e. the market consensus. Right now most of the options on Deri Protocol have a trading volume large enough for us to believe there are not too much pricing error. If there were, you are more than welcome to trade it to make some money for yourself!
Q7: Any new partners/ collaboration?
A: We are forming partnerships with real stuffs with a couple of projects, which will be disclose very soon (as soon as we have some real product implemented).
Q8: Everlasting options is extremely overpriced,the funding rate I mean
for longs. Why is the funding rate not tied to volatility + volume? Why are we paying the same funding every second when the market is hardly trading?
A: Regarding the logic behind the funding fee mechanism, I suggest you read the whitepaper of the everlasting options (https://github.com/deri-protocol/whitepaper/blob/master/deri_everlasting_options_whitepaper.pdf)
The short answer to your question: the funding fee is paid for the risk, not for trading activity (so it has nothing to do with volume). Think about the classical option, the prices have nothing to do with the option trading volume either.
And again, very obviously, if you think the options are overpriced, I suggest you short it to make some money for yourself.
Q9: What are the plans to attract new users?
A: That is the whole marketing/operation plans are working on, including but not limited to:
1. all kinds of events/activities/tasks, etc
2. trading competitions
3. forming partnerships with other projects etc.
Q10: So why are the leverages in percent like 25%, 50%, and not just 2.5x, 5x, 10x, am I not understanding this correct? Is there leverage on powers if you want?
A: The percentage numbers do not refer to the leverages, but refer to how much of your margin has been held for collateral. It’s a different thing from the 2.5x, 5x, 10x numbers. (But they are related.)
As for whether there is leverage for powers, the answer is yes. But not every leverage is like the leverages of futures that can be simply expressed as 5x, 10x, etc. Leverage expressed by simple numbers are only applicable to perpetual futures. The leverage of options and powers are all dynamic.
I see why you are asking this question. We are rolling out per-position margin mode, in which the 2.5x, 5x, 10x kind of leverages make sense and will be displayed. There you will have what you expected when asking this question.
Q11: When can I place a limit order?
A: That's another thing under development. ETA is 3 or 4 weeks.
Q12: Is there a Meth² calculator where I can enter my own current price? The PNL calculator only uses the actual current price, I want to simulate.
A: Since it’s not a very typical demand (do correct me if I am wrong), it is not provided on the webpage.
However, you can easily do it yourself. If your “own current price” is P0, then a back-of-the-envelope calculation of the PnL would be: =P²-P0² As simple as that.
For a precise simulation, you can refer to this documents: https://github.com/deri-protocol/whitepaper/blob/master/Pricing_Continuously_Funded_Power_Perpetuals.pdf
Q13: Have you ever considered updating the UI? I think what Deri needs is a more shiny UI and a bit more beginner friendly.
A: our UI engineer is working on this constantly. However, I would say whether the webpage style should be more shiny is a very personal thing. What if a shiny version is adopted but somebody else is not happy with it?
As for beginner friendliness, the current UI/UX design has probably done the best (try Binance Future or Deribit for a comparison).
That being said, we are considering a per-position margin mode, which might be more friendly for beginners. Within the per-position margin mode, the UX will be substantially simplified.
Please stay tuned.
Q14: Hi there, is there any plan to have staking for Deri for platform fee splits? or any other big token changes coming anytime this year?
A: There is no plan to “have staking for Deri for platform fee splits” as this will be treated as dividend which would make DERI a security token. One thing we keep as principle for the tokenomics of DERI is that we make sure DERI is NOT a security token.
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.