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How does Futureswap utilize 100% of the assets in the fund pool?

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According to the current slippage parameters, after reaching $50 million in liquidity, the slippage should be better than other derivatives exchanges for a $1 million contract transaction on the Futureswap platform.

Original title: "Project Express | How Futureswap will work with you to mine the derivatives market in the DeFi world"

Original source: Mars Finance

Before understanding Futureswap, we must first form a basic judgment. The direction of cryptocurrency derivatives is a very potential development direction-in the traditional financial world, the trading volume of derivatives is higher than that of the spot market. Taking the foreign exchange market as an example, the transaction volume of derivatives is three times that of the spot market; however, the transaction volume of cryptocurrency derivatives is still hovering at half of the spot market.

Compared with centralized exchanges, we find that DeFi is more exciting; derivatives trading in the DeFi world is even more exciting , we have seen more and more mortgage assets in DeFi in the past year.

Nowadays, a consensus has been reached-people hope that the decentralized financial industry can continue to iterate and develop better based on past successes. DeFi derivatives transactions So Futureswap is a good example. Mars Finance will take you to learn about Futureswap and try to find wealth opportunities in it.

Three minutes to understand the working mechanism and progress of the DeFi derivatives platform Futureswap

How does it work?

Similar to Uniswap, Futureswap is also driven by liquidity providers. Users only need to deposit an equivalent amount of tokens and stablecoins (such as: ETH / DAI) to obtain an ownership share of the Futureswap liquidity pool. They can enter leveraged long or short futures positions, which will then be traded with Liquidity pool matching.

Futureswap is a decentralized automated market maker (AMM) perpetual futures contract platform that allows users to trade any ERC20 with up to 20x leverage Token. Moreover, these perpetual futures contract products have no time limit and can always remain open, as long as traders have sufficient collateral.

The goal of Futureswap is to create a platform for professional traders and arbitrageurs, after reaching $50 million in liquidity, based on current slippage parameters, in For a $1 million contract transaction on the Futureswap platform, the slippage should be better than other derivatives exchanges, and the assets in the fund pool can be 100% utilized, and liquidity providers can earn transaction fees and loan fee.

Therefore, Futureswap has made great progress compared with traditional decentralized automatic market maker exchanges, and Futureswap liquidity pool can use funds more effectively , thus providing liquidity providers with higher stability and potentially high returns.

Dynamic Financing Rate (DFR) mechanism

Developers believe that Maintaining a balance between longs and shorts is important for our system to maximize returns for liquidity providers. In the case of trade imbalances, liquidity providers are affected by an over-represented party. The Dynamic Funding Rate (DFR) is a mechanism of the future capital market system designed to maintain a balance between long-term and short-term open volumes.

The fund rate is dynamically changed according to the balance of short and long positions. A volume-balanced long-short pool would charge close to 0% funding, while a pool heavily invested in the long term would charge a much higher long funding fee, with an incentive fee for underrepresented shorts.

In order to enable dynamic fees, traders do not own a certain amount of collateral, but rather a relative share of the collateral pool for their trade type. When a transaction is initiated, the appropriate collateral is transferred from one collateral pool to another. This facilitates dynamic funding charges across all longs and shorts at the same time.

Example: If both the long and short pools are 50% allocated to open trades, then the financing fee for both parties is approximately 0.03%. A large trader opens the remaining 50% of the long pool, so the long pool is now 100% allocated, while shorts remain at 50%.

Futureswap relies on the volume of short longs and short shorts remaining relatively balanced most of the time. These pools can become very unbalanced due to large trades or large spikes in volatility, but this affects funding rates, which in turn incentivizes less popular parties to increase their volume.

If the DFR is +0.01%, it means that every 8 hours the long position will pay 0.01% interest on the short position. If the DFR is -0.23%, that means shorts pay longs 0.23% every 8 hours.

DFR is a percentage fee for the entire position size. As a volume-based borrowing fee, Futureswap aims to maintain a volume balance between open longs and shorts.

The funds of long and short positions will be pooled into the fund pool. The function of the dynamic fund rate is: Futureswap will follow the dynamic fund rate A fee is charged at a certain rate, which is then paid to pools with lower demand.

If the gap between the fund pools is widened, the dynamic fund rate will increase accordingly, thereby inhibiting the popular trading direction. In other words, "subsidize" shorts with longs, or "subsidize" longs with airdrops, until both sides reach an equilibrium position. The advantage of this mechanism is that extreme volatility is limited to the greatest extent, and it can also give appropriate rewards to liquidity providers who take risks.

If all traders are short causing the price to drop, for 100% holding tokens, or 50% tokens and 50% stablecoins , the risk exposure of the liquidity provider is actually the same, but the dynamic funding rate reduces the possibility of this happening.

Oracle Relay Network Improvements

January, DeFi The Beta version of FutureswapV2, a derivatives exchange, added an oracle relay network (ORN) for real-time quotes. This is the most notable improvement of Futureswap V2.

ORN can be thought of as a mesh between price oracles and meta-transaction processor nodes. ORN receives a signed message, verifies that the message is valid, and puts the transaction and the current asset price on the chain.

In order to give the user full control and ensure accurate and safe prices, the boundaries of the transaction price are set by the user. If the ORN price goes outside these bounds, the transaction will fail.

In the future, Futureswap will focus on optimizing ORN to attract more node operators, which will help achieve the goal of decentralization.

Trail of Bits is currently auditing the Oracle Relay Network (ORN), while OpenZeppepn has audited Futureswap’s Ethereum smart contract.

The familiar "transaction is mining"

FST is Futureswap Used for voting and trade fee discount systems, and also for voting on proposals affecting protocol code changes. FST allows for democratic modification of the protocol, which will allow the protocol to evolve and improve over time.

In this system, traders, liquidity providers (LP) and recommenders can receive FST governance token rewards every week. FST tokens create an incentive mechanism designed to reward users who contribute the most to the system. FST tokens are distributed weekly based on users’ share of total trading volume, provided liquidity, and/or referrals. Essentially, the more you use Futureswap over time, the more FST you will earn.

Traders can earn FST tokens according to the ratio of their weekly total transaction volume to the total network transaction volume of the week, if you are in the total transaction volume The higher the percentage, the more FST token rewards you get every week.

Traders who hold FST tokens can also enjoy transaction fee discounts. The discount ratio will be calculated according to the logarithmic curve, which can reduce transaction fees by up to 30%. The coolest part is that you don’t need to burn your tokens to get discounted transaction fees.

Futureswap also set up referral rewards for users who promote the trading volume of the platform. The referrer’s FST token income is mainly based on the closed trading volume of users you recommend and other recommendations Calculated as a proportion of the total amount of closed transactions by a person.

Futureswap aims to be fully decentralized and will be handed over to the community to operate as soon as possible. The FST token distribution rewards the most active and engaged users. These FST token holders can then create and vote on new proposals, such as adding new trading pairs, changing system parameters, etc. Token stakers must consume FST tokens if new proposals are to be created.

According to the plan, in 9 years, 100,000,000FST will be produced. Futureswap tokens will be distributed to the most active users on the platform. When there is less activity, Futureswap is designed to use FST tokens to motivate users.

Early adopters of Futureswap can get a big advantage, because Futureswap tokens will be distributed to the most active users on the platform. When there is less activity, Futureswap's The design principle will utilize FST tokens to incentivize users.

Summary of the main features of Futureswap

Automated market making: Futureswap does not depend on the order book, but It uses the assets of liquidity providers for automated market making, similar to Uniswap.

Best Price Execution: Once Futureswap reaches critical liquidity (estimated ~$50M), Futureswap's slippage/price execution should be better than current centralized exchanges Offered is much better.

Incentives: Liquidity providers receive FST and trading commissions from traders' activities.

Position Balancing: To minimize liquidity provider risk, Futureswap incentivizes demand-side drawdown by using scaling fees that reallocate capital from the demand side, As well as maintaining symmetry between longs and shorts by making the open/exit prices of new trades less favorable. See the Dynamic Funding Rate section for more information.

The latest news is that Futureswap announced that it will mint 100 million FST tokens in the next 9 years, and also announced the governance token distribution schedule. Futureswap will allocate 30% of the total supply, 30 million FST, to Futureswap users through an incentive mechanism within 3 years to provide governance; at the same time, 18% of the total supply (18 million FST) tokens will be used to establish a development fund.

Finally, it needs to be emphasized that in this ecology, everyone has the opportunity to mine, and they come early; Participants get more in return.