Telegram AMA Recap on April 8th
On Friday, April 8th, we had a Telegram AMA with Deri’s co-founder and CEO, 0xAlpha. Continuing the theme of the last AMA, 0xAlpha answered the pile of confusions and suggestions of Deri Products from the community.
The AMA Entrance: https://t.me/DeriProtocol
Let’s watch the detailed & complete AMA recap below:
Hello, my Deri fellows~I am saying Hello from Miami 2022.
TBO, Bitcoin2022 is almost all about electricity, mining machines, legal & compliance, web2-style connections with traditional finance, etc. My opinion is these are all practical, but not quite crypto-native, not as cool as the DeFi community at all.
First of all, let me brief on the milestones. Since the last AMA, we have several important updates:
1.Two new perpetual futures, APEUSDT and GMTUSDT, are live on the Deri Protocol now. As usual & exclusive on Deri Protocol, 18+ base tokens are supported to be traded with them.
2. Several new functions have been implemented on the deri.io website: Position Share Function, Global Search Function, Deri Info Page Update & Simulate PnL Function.
Position Share Function: Enable traders to share their Perpetual Futures, Everlasting Options, and Power perpetuals positions through a simple click of share button.
Global Search Function: Enable traders to select trading symbols directly through typing in the search bar, which significantly enhances the user experience & makes trading more convenient.
Deri Info Page Update: There are 2 new infos, Daily LP Net Value & Margin/Liquidity Breakdown in Deri info page now.
Simulate PnL Function: Enable traders to find out their potential profits and losses by clicking on the Calculator. It helps traders to do risk management.
3. Deri Power Perpetuals Smart Contract bug bounty program is live on Immunefi now. The bounty reward is up to $10,000 for bug finding. Welcome your participation for Deri powers’s perfection!
Alright, let’s move to the questions.
Q1: Why don’t you serve vaults service like crab strategy of Opyn squeeth?
Power perp short + 2x future long = delta neutral position to get funding fee. But if I long future, it doesn’t have equity efficiency. I want to optimize APY profit of powers.
A1: It’s a great suggestion. There will be a series of products like this to be rolled out. Actually, there are so many of such products that can be built on top of Deri Protocol. We will roll out a list and call the community to participate. We will publish the list soon.
There is one thing to be clarified : These are products built on top of Deri Protocol, which means it’s not part of the protocol.
I want to emphasize that Deri Protocol, just as it is called, is a protocol. Deri Protocol is meant to be kept simple, flexible and financially efficient. And on top of that, we (meaning the whole community, not just the team) can play with it and build all kinds of (fancy and sophisticated) products. In that sense, Deri Protocol is something between the blockchain network and Dapps.
Q2: I am currently using Deri’s power perp, and I am researching all the power perp products of other platforms. Solana’s Friktion Options Protocol has launched a beta service of a volatility exchange called entropy. Here, we plan to release a 0.5 power perp that can directly hedge yield farming. It is possible to directly hedge impermanent losses, so it has excellent capital efficiency. A 2 power perp imitates a call option, while a 0.5 power perp imitates a put option. However, since this exchange is a bidding system, the trading volume is very low. It would be great if Deri protocol released a product like this.
A2: Actually I briefly replied to this one right after it’s asked. Again thank you for bringing this to our attention. Let me post some updates today:
We looked into the 0.5 power perp and it’s true that it’s more convenient for the IL-hedging purpose. This is because the value of LP token for a CPMM has a square root term, which is the one to be hedged. And 0.5 power perps do this job very well. So, we are evaluating whether we should roll out 0.5 power perps. Within the Deri V3 framework, implementing 0.5 power perps is as easy as adjusting some parameters (almost no coding job is needed). However, we do need to consider several other factors. We will keep you posted.
Q3: It would be nice to see not only the price but also the funding fee.
A3: We will discuss this suggestion with the team. Meanwhile, from this interface, you are just one click away from the funding fee.
Q4: The project is okay, the application of the currency is not good, the unlimited mining and transaction rewards are like blood-sucking, and the currency price has no bottom without empowerment. DAO governance is just a gimmick.
What the project party needs now is that you go to his platform to do transactions, the reward is DERI, mining is to accumulate liquidity, and the reward is also DERI, then these rewards ultimately belong to blood-sucking, where does the blood come from, it’s just the currency holder.
The project party itself does not care about the possibility of the currency price, and the currency price does not increase by means. Before the final release of the trillions of coins, this project cannot be out of the circle. Without users, the project will be over, and the project audience is still relatively small. The project party is too confident in itself.
A4: 1. Empowering the DERI token is one of the most important tasks of 2022. I have explained this several times: it’s not that we don’t care about empowering the token; it’s just we should build the core product first, without which there is nothing to empower the token. DERI was only a governance token at the beginning because we were not there yet — implementing the empowering mechanism does take some effort and time. But we are getting there.
2. The real problem you pointed out is the inflation of DERI token. And the best solution to that is the trading volume, which is what we are working on. Aslo I would like to call you all to participate promoting DERI — ask your friends to trade on Deri. Once the daily trading fee accrued for burning DERI surpasses the daily new mining (the inflation), DERI becomes deflating.
So, there is more you can do than just complaining (I am not saying complaining is not welcome, I am simply saying, while complaining is constructive, you can do even more). If you worry about the inflation, then help us ask your friends to trade.
For every 1 dollar trading fee paid by traders, 80 cents will be used to burn DERI:
Q5: Serious concern, are we getting rugged? TVL now is at 13 million and it used to be at 17 million, also massive dumping is going on. What’s going on?
A5: Yes, there were LPs who removed their liquidity. But this is by no means “rug”. And of course I am concerned about TVL too. So we are working hard to promote Deri among the trading communities. As long as there are sufficient trading volume on Deri, LPs can enjoy profits in base token (whatever they deposited, BUSD, BNB, etc). That is the organic way to increase TVL and is the only workable way in long term.
A6: Can you tell me more about the feature: Simulator PNL ? Will it be 100% correct or will there be some deviation with reality ? And how does it work？
Q6: There will be slight deviation with reality (that’s why it’s called simulator). However, deviation would not be significant. It works simply: it calculates the theoretical derivative (options, powers) price for hypothetical underlying price (specified by moving your mouse) so that you can see clearly where it goes when the underlying price changes.
Q7: Staking is one of most features attracting the users. So do you have any plan to develop this feature in the future ? Or will you have another feature having more interest?
A7: At the moment, you can stake in this pool: https://deri.io/#/pool/v2_lite/56/future/0x26bE73Bdf8C113F3630e4B766cfE6F0670Aa09cF
There will be more staking places as we implement the empowering mechanism.
Q8: Are you going to increase Deri staking APR？
A8: As explained before, DERI staking APR is determined by the market. theoretically we can adjust the parameter so that there is more mining production in the DERI staking pool, but if more DERI are deposited into the pool, APR will drop again. whatever the current APR is, it’s the balancing point chosen by the market.
Q9: What is the current operation of the burn mechanism? Have 80% of the previous votes been publicly implemented?
A9: Everything is on chain. You can see the details of the burning from this smart contract:
Q10: What’s the contract mechanism of Deri? Why is there a gap of the prices on Deri between the ones on the other exchanges?
A10: First of all, there is a gap between any two exchanges.
As for the pricing mechanism of Deri, this is a bit beyond the scope of AMM. I suggest you take a look at the whitepapers. Simply speaking, for futures, it takes the price fed by oracle as “index price” and buying and selling orders will push the price up and down (per the DPMM algorithm).
Q11: Are the historical funding rates for perpetual futures published anywhere? I want to compare to CEX and arb the funding rates between the two.
I think it would also lead to more volume as more traders look to arbitrage between exchanges and staking opportunities.
A11: Here is an article explaining the arb on Deri: https://deri-protocol.medium.com/how-to-arbitrage-on-deri-823965dee64
As of now, since the arbitrage on Deri is not that competitive, whenever there is a net position, funding on Deri is higher than that on CEX. In other words, even without a rigorous back testing based on historical funding fee data, you can still arb between Deri and CEX (very liquid ones such as Binance Futures).
We will put the history funding rate data into the pipeline. But like I said, right now you might be able to arb on Deri even without such data. Going forward, when the arb becomes competitive, then such data is critical, just like any other cross-exchange arb.
About Deri Protocol
Deri Protocol = (Perpetual Futures + Everlasting Options) x Decentralized.
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.