A lot is at stake for one anonymous DeFi project that has recently raised $60 million in locked liquidity. Core’s focus with the new project, Delta Financial, is on minimizing risk inside the highly volatile world of tokenized assets. The underlying goal is to create a healthier marketplace by locking down assets during times of mass volatility.
DeFi has recently made its way into the world of options trading. This follows a significant push into the margin trading arena, with crypto trading platforms managing to attract notable trading volumes, however the same cannot be said for the vehicle of the decentralized options. Decentralized options platforms perform in a different manner to traditional centralized options trading platforms.
Unlike on centralized options platforms, with DeFi for an option to be sold, the underlying asset must first be minted. Options are collateralized by being sent in full value to Vaults. This ensures that the contract can be exercised and fulfilled. Once this happens then the options can be transferred between Ethereum addresses or traded on digital exchanges.
The Problem With Liquidity in Options
Currently, there is an issue of insufficient liquidity in the DeFi options market and there are just not enough options available for trading. In addition to this, market makers are faced with high risks as with options, the seller takes the majority of risk on, while the buyer’s risk is limited to his premium. This means that in a decentralized market place it doesn’t take an institution to take the sell side of the trade, it can be offered by regular people.
Guaranteeing Liquidity to Tamper Volatility
If certainty were a cornerstone of the options market by way of sufficient liquidity, then this would compress the extreme volatility and price swings we see. This, in turn, could minimize premiums for the options buy-side and promote healthy options prices across an array of different tokenized assets. It would tempt more options traders to move to the DeFi side.
How Is Delta Financial Doing it?
Delta Financial is using a new Open Vesting Liquidity (OVL) standard which can tamper with the wild price swings within the cryptocurrency market. This is done by way of Delta Financial’s principal focus, which works on a forward vesting mechanism of its token and takes place on transfer. The vesting schedule is then activated whereby 10% of the token balance is initially sent to the user and then the remaining 90% is released over the course of a 2-week period. If the token is transferred onwards then the vesting timetable is canceled. The unfulfilled tokens are moved to a Vault where they can mature, thus keeping consistency and smoothing the token volatility.
coreDEX and OVL
The team behind the project has decided to remain anonymous, which seems to be the latest fashion in a way that is sweeping across DeFi projects. The project also allows users to engage and invest in swaps, loans, and LP futures. There is talk of a new Delta token being released on the back of coreDEX.
The beauty of this project is that it is focusing on ameliorating the DeFi scene by creating something that actually enhances the world of tokenized assets and cryptos, by smoothing down some of the sharp edges.
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