The decentralized exchanges came to proffer solutions to the challenges of regulation and security associated with the centralized exchanges. But they have their shortfalls, DEXs are not very liquid, they are less established, and they may suffer from poor interfaces.
However, the Deriva DEX eliminates these problems by uniquely combining the performance of centralized exchanges with the autonomy of DEXs.
Deriva DEX is an Ethereum based next-generation DEX for derivatives contracts. It’s an exchange owned by the community and has a sane liquidity mining native token model.
This model ensures that users are entirely in charge and controls the platform. This DerivaDAO review describes the DerivaDEX protocol, the founding team, DDX token supply, and how to buy DDX.
What is Deriva DDX?
Deriva DEX is a new decentralized exchange that seeks to offer traders the security and performance they need. Its key performance advantage is its competitive fee structure, real-time price feed, and fast trade resolution.
DerivaDEX is a Decentralized Autonomous Organisation DAO from inception, with its users deciding on the community’s governance. The exchange allows traders and token holders to control the platform via voting.
The creation of the exchange was by the great divide between blockchain tech and crypto trading. Therefore, it was built and is hosted on the Ethereum blockchain. Finance traders desire to interact with leveraged derivatives in a secure, permissionless way and without worrying about ownership risks.
Centralized exchanges have enormous liquidity pools and efficient UXes, but lack security and contain considerable constraints and protocols. Contrarily, decentralized exchanges utilize cryptographic algorithms for facilitating complex smart contracts but lack effectiveness in their UXes.
The DeFi exchanges also lack sufficient liquidity pools. Therefore, DerivaDAO integrated the valuable benefits of both exchanges while attempting to eradicate their weaknesses.
The new DEX has four essential features, the exchange, the governance Application, Insurance and Mining, and the DDX governance token.
The DDX token serves as the governance token that powers the network. Holders of these tokens can vote for an adjustment in the protocol features like a reduction in fees. They can also stake it to earn profit or to the insurance fund to receive more DDX. The fund provides a global trading experience for users.
Founders Of DerivaDAO
Frederic Fortier and Aditya Palepu co-founded DerivaDEX in March 2020 with Main Office Headquarters in San Francisco, US. Aditya Palepu is the CEO of DerivaDEX and Duke Eng ’13 (ECE/CS). He is a Blockchain enthusiast, formally a DRW algorithmic trader. He worked with a team of crypto traders and blockchain Engineers with a very theoretical mindset.
Frederic Fortier, a DerivaDEX executive, and co-founder is a software engineer with several years of experience building distributed systems. He built the Enigma algorithmic trading platform, and he is also an independent trader running his private biotech and crypto fund for years.
Other members of the DerivaDEX project team include Joel Cordeiro, Ainsley Sutherland, Mathieu Baril, Jeffrey Knight, and Brennan Fife. Joel is the protocols, senior full-stack Software Engineer. He is also a contractor in the ECM domain for five years now.
Ainsley is the product strategist; she has worked as Product & Partnership Strategy at Enigma MPC. She also worked as a product developer and user research in various application and protocol products. Ainsley focuses on defining the feasibility and feature requirements of DerivaDEX with the project engineering team and partners. Mathieu heads the Operations; he is the CEO and founder of Dexinova.
Moreso, Brennan is the frontend and web3 developer, while Jeffrey is the project software engineer. The entire team members of DerivaDEX are the end-users of the platform, meaning that they are traders. Hence, they have a better understanding of retail and institutional customers. DerivaDex has three Arrows Capital, Dragonfly Capital Partners, Coinbase Ventures, and Divergence Ventures.
Main Features of DerivaDEX
The founders of the DerivaDEX project intend to build a project that fills the void between blockchain engineering and trading. They seek to satisfy trader’s desire to hedge with and speculate on leveraged derivatives in a censorship-resistant and secure manner. They also designed this project to reduce the custody risk for traders.
The project adopts the advantages of centralized and decentralized exchanges, like lots of liquidity, strong UXes, and cryptographic security. It combines these advantages to build a more stable exchange with the following vital features or properties.
- Decentralized Autonomous Organization (DAO): A decentralized autonomous organization is an object/entity of no centralized control. The decision-making follows a bottom-top model and is governed by the protocols community organized by a list of rules executed on the blockchain. A DAO has multiple functionalities and has a distributed/shared governance. For example, DerivaDEX operates a decentralized a solves censorship resistance and single point of failure concerns.
- Open order book, no AMMs; on-chain settlement: An order book is a digital list of trade (buy or sell) orders for a particular financial or security instrument organized via a price index. It lists the number of shares bidden on at every price point or their market depth. Order books recognize the market participators or active traders behind the trade orders. However, some individuals prefer staying anonymous in the buy and sell orders. These lists assist asset traders and market transparency because it offers more detailed trading information.In addition, meaningful exchanges utilize order books for numerous assets such as bonds, currencies, stocks, and cryptocurrencies. Deriva DAO offers traders a familiar, performant, and capital-efficient UX instead of the standard automated market maker (AMM) design used by most DeFi projects. Off-chain price feeds, matching engine, and liquidation operators solve for speed and efficiency, allowing us to synthetically represent any asset and offer a tighter bid/ask spread.
- Liquidity-mining: This type of yield farming where decentralized finance (DeFi) protocol users receive extra tokens added to their expected returns. Users earn these additional tokens for just depositing their assets into a liquidity pool. Deriva DAO has a carefully engineered and robust model that highly incentivizes participation in the governance and operations of DerivaDEX.
The Deriva (DDX) Token
The DDX token is an ERC20 utility token that facilitates multiple functionalities, including governance. The token offers users the ability to pay low transactional fees on the ecosystem. It can also be used by operators who manage oracle price feeds. Users are paid a percentage of DDX tokens proportional to the individual stakes distributed to each block.
As of the time of writing this, the price of 1 DDX stands at $5.45, and its trading volume is $2,552,612.46, a 24.16% decrease from the previous day’s trading volume.
Over the past week, Deriva’s token has experienced a bearing trend, but there are predictions that tides will turn in favor of the bullish traders.
As earlier stated, DerivaDEX is a futuristic DEX for derivatives contracts. It combines the performance of centralized exchanges and the trustless autonomy of decentralized exchanges. Furthermore, DDX allocations and emissions have been established to create a stable and consistent environment for the protocol’s stakeholders in the environment.
In Deriva’s DDX tokenonmics, there are three major components. These are the DDX: Genesis Emission, Liquidity Mining Emission, and the Insurance Funds.
Most areas of the DerivaDEX are predisposed to change by the Decentralized Autonomous Government. This includes control and facilitation of the insurance funds. An approach like this provides the community access to quick response to contexts and new opportunities.
The DDX tokens will remain locked and “non-transferrable” until the “governance cliff” is over.
DerivaDEX Governance Cliff
Deriva has been a decentralized organization since its inception. However, the stakeholders who control the DDX tokens need to pass every update and edit to the system. Therefore, to encourage early interaction with the protocol’s DAO, the team initializes the genesis supply and insurance program. Using these mechanisms, users can earn DDX native tokens to participate in the ecosystem but cannot transfer them.
DerivaDEX’s governance cliff guarantees that the entire community fully understands the governance mechanism. It checks that DerivDEX enters the blockchain/mainnet period with the best governance participation and oversees good discussions around the protocol’s governance proposals and topics.
DDX Token Emission
- One hundred million DDX tokens are supplied within ten years, of which there is no additional inflation or emission of tokens.
- Fifty million of the tokens are circulated as a portion of Genesis supply called the “Genesis Token Emission.”
- The remaining 50 million are distributed in the first ten years of launching as a portion of the liquidity mining supply.
Genesis Supply Distribution
- 34,005,404 DDX of the tokens allocated for the Genesis supply are reserved for the DerivaDAO foundation and the development team. However, only 21,263,737 are released after the network deployment. This apportioning includes business development & partnerships, future fundraising, capital funding for community initiatives, and progressive engineering innovations for DervieDEX.
- The unlocked tokens can be utilized for these functions at any given time. The development team’s protocols are susceptible to unlock schedules and industry-standard vesting, differing according to the commencement date.
- 15,334,596 DDX tokens from the overall Genesis supply are apportioned to investors using a one-year linear scheme. Thus, 98.43% (15,094,596 DDX) of the genesis supply is subject to the 1-year linear schedule, whereas the remaining 1.57% (240,000 DDX) utilize a 2-year linear plan.
- 660,000 DDX from the overall Genesis emission are distributed to advisors of the protocol. 69.69% (460,000) utilizes a 2-year linear schedule, while, the remaining 30.3% (200,000) utilize a less-than-three-months plan.
What is a linear schedule?
- Stakeholders of the 1-year linear schedule earn 8.3% of their overall allocation upon the commencement of the Genesis distribution. This 8.3% payment continues monthly until they (stakeholders) receive their total payment allocation.
- Stakeholders of the 2-year linear schedule earn 4.17% of their total allocation once the tokens are distributed. The 4.17% payment continues monthly until their total allocation is met.
- All the DDX tokens on the linear schedule are not transferrable until the DDX governance cliff s over.
Liquidity Mining Supply Distribution
- Fifty million of the overall supply is allocated to liquidity mining distribution.
- Five million DDX tokens from the Liquidity mining supply are shared linearly for one year as a portion of the insurance mining program. (1.189117199391172 DDX each block, for the 2,102,400 blocks).
- The remaining 47.5 million DDX tokens are minted using the liquidity mining program—which includes trading mining, for ten years.
(DDX token allocation image reference from Medium).
All of these are only initial parameters. For example, the rate of the Liquidity mining distribution, the period, and the selection of liquidity mining programs are parameters susceptible to future change through DerivDAO governance.
The DerivaDAO is responsible for not only token sales and distribution. The Decentralized Autonomous Organization also facilitates all parameters of the DerivaDEX exchange. These parameters include regulating the capitalization of the insurance fund, controlling trading fees, and listing products. One peculiar feature of the exchange is the need for the exchange to create and maintain a stable insurance fund.
Dissimilar to centralized crypto exchanges, this DAO-controlled fund will have specific parameters set by the governance.
DerivaDAO’s stakeholders and participants are responsible for managing the fund size and implementation. The insurance mining program will initially capitalize this resource and then further by transaction charges and liquidation. The accepted collateral types and the stabilization of the various collateral types are susceptible to change by governance.
Succeeding months of rigorous development, testing, and research, the Deriva development team handed off most of the project, thanks to investors and partners. The group raised $2,700,000 from investors via two rounds of toke financing and established a team of professionals supporting them. The investors of DerivaDAO include:
- Dragonfly Capital Partners
- Electric Capital
- Three Arrows Capital
- Polychain Capital
- Calvin Lui—lead strategist at Compound.fi
- Coinbase Ventures
- CMS holdings
- Phil Daian
Conclusion Of DerivaDAO
The decentralized finance market arose to replace the autocratic and controlled means of traditional and centralized markets. DeFi brought in trustlessness, eliminated third-party interference, and replaced KYC (Know Your Customer) protocols with a distributed system of shared control.
However, the central market has a much large market share than the DeFi market. Moreover, while it’s true that centralized exchanges have superb transaction performance and better UI, they impose high transaction fees.
DerivaDAO offers a platform to bridge centralized exchange performance with DEX’s autonomy to provide a high-performance, autonomous, and distributed ecosystem. Users can utilize the ERC20 token (DDX) for multiple functions. The protocol offers three components that simplify user interaction: the decentralized autonomous organization, open order books, and liquidity mining.
The protocol is fully integrated with a decentralized exchange to allow users to trade in between centralized and decentralized pools.