New DeFi Perpetual Contract SheepDex: ‘Risk-free’ Model brings new opportunities for on-chain derivatives?
The revolutionary nature of DeFi
In 2021, the DeFi market, which had been dormant for more than two years, finally ushered in a big explosion under the macro background of global liquidity excess, the halving of bitcoin mining and the start of a bull market in digital assets, as well as micro-innovations such as Yield Farming and AMM automatic market makers.The DeFi fields of decentralized stablecoin, lending and spot trading have all made substantial leaps forward, and a number of leading projects have gradually been born.
● Asset non-custody and transaction transparency: assets no longer need to be entrusted to a third party trusted institutions custody, and all transactions are real and verifiable to eliminate human evil;
● Borderless trust: Trust is no longer limited by brand, but from open source and code is law;
● Disintermediation: The removal of centralized institutions such as information and credit intermediaries (taxing intermediaries) and the return of 100% of revenues to the maintainers (value creators) of the decentralized network;
In the long run, these revolutionary qualities will drive a paradigm shift in traditional financial markets.The impact and even subversion of DeFi on CeFi and TradFi are becoming an unstoppable trend.
The DeFi of derivatives
Although the DeFi market is growing, there has been no “representative” DeFi product in the derivatives sector, one of the largest financial markets in the world.
Why is this? We need to start with the analysis of user needs in the derivatives market.
Derivatives are mainly used to meet hedging and speculation needs, while the current market for digital asset derivatives is mainly for speculation.Years of practice shows that the main needs of users of speculative market are:
● Point: to accurately capture the price of open positions;
● Disk depth: the need for sufficient disk liquidity guarantee as far as possible no slip point of the transaction;
● Leverage ratio: high enough leverage is required to improve capital utilization;
● Know How: You need someone you trust to teach you the trading knowledge and strategies that will make you profitable.
SheepDex, an innovative game-breaker
UniSwap’s great success is not because it offers a better spot trading experience than the current CEX, but rather because it meets the long tail of asset issuance demand that CEX cannot meet with a licenseless, very low-cost issue.
In essence, success comes from the discovery of unsatisfied new markets.Only by applying the characteristics of blockchain technology to meet the needs that traditional finance cannot meet, may be the key to breaking the game. SheepDex is a derivative protocol that follows uniswap the same path as From a trader’s perspective:
Molly opened a position at $2500 and went long for 1 ETH, and paid a one-time transaction fee of $2.50 (1‰). After that, the system simply deducts the daily opening fee (which varies depending on volatility) and the position is maintained. Take the $25 first-day opening fee for example.
If ETH rises by 10% on the day, Molly’s profit is 2500*10%-25–2.5= $222.5.
If ETH drops by 10% on that day, Molly only loses $25 in position holding fee and $2.50 in transaction fee.
This is an entirely new trading demand, an untapped market that has always existed.
Because such products pose a high challenge to the team’s ability to design financial engineering products, there is also a huge trust gap to bridge.
The experience of the Sheepdex team from top financial institutions and top tier Internet companies, combined with the nature of blockchain, makes it possible to launch a product like this.
SheepDex Website: https://SheepDex.org
SheepDex Twitter: https://twitter.com/SheepDex
SheepDex Telegram: https://t.me/SheepDex
