On Friday, January 28th, we had a Telegram AMA. The following shows a recap of the questions with 0xAlpha’s answers.
Deri Protocol Telegram: https://t.me/DeriProtocol
Hello~ Deri fellows! AMA time again!
During the past several weeks, the crypto world has been hit badly.
But let’s not lose hope. The whole history of the crypto world has told us the bear market period (rather then bull market time) is really the time when things are built and fortunes are made. That’s also what’s going with the Deri team — We kept building and delivering!We even feel that this is a better time to build.
There have been a couple of major events since last AMA.
1. Deri added 4 new BSCUSD strikes & 2 ETHUSD strikes in Everlasting Options on 26th, January:
① 4 new BSCUSD strikes: BTCUSD-100000-C、BTCUSD-40000-C 、BTCUSD-30000-P、 BTCUSD-20000-P
② 2 new ETHUSD strikes : ETHUSD-3000-C、ETHUSD-2000-P
Especially, we launched the trading of BTCUSD-100000-C, which is to pass a signal to the whole crypto world: let’s not lose hope and wait for this 100K call to become in-the-money.
2. Deri launched the Demo Testnet trading event on 27th, Jan.
In the demo testnet trading event, you can get a deeper understanding of perpetual futures & everlasting options without risking your funds, while instead earning DERI Rewards. The total prize is 50000 Deri tokens. Welcome to the event for the first experience of perpetual futures & everlasting options trading.
All right, let me get on the questions now.
Q1: Can you say when your marketing will be at good level? When new dex/cex? Community is becoming nervous.
A1: “Good” is a subject word so I am not sure of your definition/standard of “good level”. but we will definitely make more efforts on this dimension.
Q2: Will Deri deployed in Oasis network? I hope so indeed!
A2: Oasis is among the networks that we are investigating right now. There are several factors we need to take into account when choosing networks to deploy. For example, Deri V3 has some dependencies: the spot swapping protocol and the money market protocol. These are the things we are checking in our evaluation for the feasibility of Deri deployment.
Most likely the next network to deploy Deri Protocol is an Ethereum Layer2 network.
Q3: Is it possible for Deri to provide options with different funding period? Is there any downside to it?
A3: Theoretically it’s possible. But it has some practical obstacles, which we are looking into how to resolve.
There are some downsides of course. For example, liquidity fragmentation is one of them.
It’s always a trade-off. We are constantly making choices between different pros and cons.
Q4: The high price of Deri coin could be the biggest advertisement for you. and now its creeping is the biggest anti-advertising for you. You have to do the best marketing to increase Deri price. Then investors will be interested to your platform. There is no other way.
A4: We are doing marketing.
But again we want to point out that our marketing is for the product. We are not interfering/manipulating the price of the token.
I said this many times but I want to say it again: Deri Protocol is driven by the product. DERI is NOT a memecoin or an “air-coin”, for which there is no product behind and thus all the team’s job is interfering/manipulating token price. If that’s what you are looking for, DERI is NOT your cup of tea.
If you believe in the model of Deri Protocol: BUIDL and share the value from building, then DERI is your token. And if that’s what you believe in, it would not be difficult for you to hold DERI, as it’s very easy to see what the team has been doing in terms of BUIDL.
Those investors sharing the same values as ours will be interested in our platform. There is no other way!
Q5: You had to develop both of your products at the same time. You didn’t have to separate the Deri token from the Deri dex. We can not find almost any advertisement of Deri token on social media.
A5: We never separate the Deri token from the Deri dex. it’s just we need to first build and create value (the “Deri dex” part you were talking about) and then share the value (the “Deri token” part you were talking about).
I spent quite some time discussing this issue during last AMA. DERI is a token on top of the product (the dex), without which the token would be worthless.
Q6: Why is the volume so low? People are moving away from dex, we were expecting very good things with v3 as Deri Protocol, but on the contrary, it was worse.
A6: I don’t agree with what you said. It’s true that the migration from V2 to V3 was a “hard fork”, which interrupted the trading activities. During the migration, there was no liquidity in the trading pools. You cannot expect the trading volume to continue seamlessly. But based on our monitoring, the trading activities on Deri V3 are picking up. It is just taking some time. V3 was a newborn, please give it some time.
Q7: Why not advertising with phenomena with a large audience？ What is the team planning to do to carry out this defense?
A7: We are doing a lot of PR/marketing events to promote the Deri Protocol. If you have specific suggestions regarding what we should do/optimize, please let us know.
Q8: Undoubtedly, the product is beautiful and of good quality. Now it’s time to market this product. With social media and new listings, it’s time to show the quality of the product to the whole world. Anyone else thinking this way?
A8: Like I said, We are doing a lot in the marketing dimension, e.g. on the social media that you mentioned. New listing is also in our pipeline. In the same time, you guys can all help on this too! If you think “Undoubtedly, the product is beautiful and of good quality.”, please tell your friends know and invite them to try out Deri! Yes it’s time to market Deri Protocol, but you can participate in this too!
Q9: What I’d like to know is: Is there a web page on Deri Protocol that shows trading volumes? Or do we have to go to CMC or other places to check it?
A9: Check it on Deri web page here: https://info.deri.finance/#/info
And I want to point out that the trading volume is picking up.
Q10: The advantage of the everlasting option is that the fee is lower compared to the one-day option. For example, if you want to keep a one-day option, you have to renew the contract every day, so the transaction fee is used every day. In contrast, the everlasting option allows you to hold a position without additional transaction fees. However, compared to the 7-day option, this advantage is greatly reduced.
A10: Deri Protocol is a protocol for derivative exchange, just like deribit is a market place for people to buy and sell options.
So this is not like a car-selling business, in which if your cars are cheaper than the others’ then you have an advantage. Deribit is great not because its options are cheap!
As for EO of 7-day funding period V.S. classic options with 7 day expiration, the major difference (among others) is that you don’t need to roll your EO again and again. For 7-day-expiring options you need to roll on a weekly basis. And every time you roll, you lose something (the bid-ask spread and the slippage). In long term, that’s a huge cost. This is especially so for short-term options on Deribit (e.g. the 1D, 2D, 1W options).
Therefore, Everlasting Option will indeed reduce your cost. The cost-reducing is NOT in the form of pricing the volatility at a cheaper (like I pointed out before, volatilities are priced at same level on Deri and Deribit). Instead, the cost-reducing is in the form that you don’t need to roll your positions again and again.
I want to say this is a very good question as it’s a chance for me to point out the essential difference between everlasting options and classical options. I will write a dedicated article on this topic to further explain it: we said EO would reduce your cost, but how?
I hope the article would help you understand why our everlasting options are more attractive than the classical ones on Deribit indeed.
Q11: Liquidator qualification: with Deri Protocol, position liquidation is decentralized and open to qualified users. Since liquidation is riskless profitable, while we encourage anybody to participate in liquidation, for some of the trading pools we require participants to stake DERI in the liquidator qualification pool and his/her staking amount has to be no less than the average level. How much Deri I need to stake specifically to get the liquidator qualification?
A11: “Liquidator qualification” was a feature enabled in V1 but not enabled yet in V3. So right now liquidators don’t have to stake anything.
But it will be enabled at some point in the future. And this is part of the token-empowering of DERI. Going forward, there will be bigger profits for the liquidators to make and we will require the liquidators to hold and stake DERI tokens to be privileged to make such projects.
I want to point out this is one of the many scenarios that would “empower” DERI token (i.e. add value basis to the token). It’s just not enabled yet because it’s less meaningful to do so at an early stage.
Q12: How to calculate the Maintenance Margin Requirement?
A12: Assuming you are asking about the options.
If you move your mouse to the Maintenance Margin part of the contract info, you will see a hover. For further details, you would need to read the second part of this article:
Q13 : Another everlasting options 01 protocol will go into the market. See how Deri EO survive with competitors like 01 protocol and Squeeth
Just wondering why you guys cannot provide more EO strikes when the current strikes are far from the price.
Power perps are different with Deri EO in some ways. But the concept and theory behind is EO. I feel in certain area or situations power perps are better than Deri EO . Especially now, when almost all strikes have no point to invest. Because when it’s come to ITM, I definitely would choose Sqeeth and OTM definitely to go for Deribit.
That’s why Deri needs to provide more strikes.
A13 : Are you sure 01 protocol’s everlasting options will go into the market? You might want to check out their website again. Last time I checked, it’s a website full of “coming-soon”.
The fact is, among the tons of people talking about something, only a few can deliver. Deri is among the very few that deliver.
When it comes to everlasting options, Deri is the ONLY one that has delivered so far. That tells you something about the difficulties of building a product (especially advanced products like everlasting options) and the competence of the Deri team!
As for Squeeth (i.e. power pers), we will do that too. And we will do it in a way more elegant than Opyn’s.
In fact, I had direct discussions with Dave White himself right after his power perps article went online. So we understood the pros and cons of everlasting options and power perps very well. Our priority was based on comprehensive analysis: we prioritize everlasting options over power perps because the former has way more use-cases than the latter.
Also, here is a little piece of theoretical work that prepared us for the actual development: https://github.com/deri-finance/whitepaper/blob/master/Pricing_Continuously_Funded_Power_Perpetuals.pdf
As for more strikes, we did that already. Because of a very important property of the DPMM V3, we can add any funding-fee-based perpetual derivatives to any existing trading pool. In practice, most likely we will start with the Inno Zone, which is for this kind of new stuffs. That is why I was saying “Power perps will be rolled out in a way not affecting the existing EO.”
Q14: Long time no new listing. We are expecting your good news.
A14: We are working on listing. But I want point out listing is the purpose of our work.
Q15: What security measures are adopted from bugs of smart contract and hacking?
A15: Please check out the audit reports:https://docs.deri.finance/library/code-audits
Also, there is a bug bounty on going with ImmuneFi:
Q16: What is the background of your project team, do you think the team’s qualifications, and experience, are able to support the long-term development of the project?
A16: You can find the team profile here: https://deri.finance/#/team
Q17: According to the project’s roadmap. What are your most important next priorities?
A17: There are two dimensions.
1. Product wise, the most important next priority would be deploying Deri Protocol on an Ethereum Layer2.
2. Community wise, we will keep pushing for a better community governance in 2022.
Q18: I have been studying the EO pricing formula for sometime. But I still can’t really get the same figure as the Deri EO price. Can you add more explanation in the white paper or somewhere to illustrate a real scenario to show how the formula works?
The closed form pricing formula is very simple and should be easy to replicate. Please note that the theoretical price would match the mark price on the deri website only when net position is zero. When there is net position, the price will be shifted by DPMM.
Q19: What about stop and limit orders? Ar you working on it?
Now I’m using the platform like LP and scalping or intraday positions because for my risk management can’t open positions in the long term without stop or limit orders
A19: Stopping and limiting orders won’t be easy. as I mentioned before, due to the tech nature of blockchain, anything depending on proactive mechanism would be difficult to implement.
That being said, we are indeed looking into possible solutions on this. Please give us some time.
some temporary “solution” would be a programmatic trading tools that help you place order at pre-defined prices, which would mimic the behavior of limit or stop orders. even thought it’s not exactly the same thing.
It’s a cold winter for the crypto world. but like I said, most of the great work and fortune are really made in the winters. Let’s not waste it! Let’s make every winter count!
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.