Technologies

An Open Finance Platform Bridging on-and-off Chain Asset Flow, Powering Synthetic Assets and Margin Trading


Abstract/Technology Overview

Problems/Opportunities

Decentralized Finance (DeFi) has become one of the most active areas in the blockchain world, and is quickly capturing the financial sector’s attention. On Ethereum alone, there are currently over $500 million of funds locked in smart contracts.

This sum is only a drop in the ocean compared to mature financial markets. For instance, on average, more than $5 trillion are traded daily in forex markets, even though in mature markets, traders face challenges such as opaque pricing and market manipulation. The current DeFi applications provide financial services with open pricing, yet they are restricted to crypto users and capped with limited on-chain liquidity.

Product/Tech Overview

We have created an open, transparent, and trustless trading platform that solves the challenge of opaque pricing and price manipulation in today's market, bridges on-and-off chain players, and ultimately increases on-chain trading liquidity, exposure, and variety. Our platform consists of a unique set of financial protocols (smart contracts) with a suite of software applications and tools to power

  1. Synthetic Assets: trade, use and earn interest on various financial assets such as forex, gold and SP500 etc.
  2. Margin Trading: open leveraged long and short positions. Instant liquidity. Capped risks and liabilities for traders. Potential profits locked by the protocol.
  3. Money Market: integrated to enable interest-earning while trading. Floating interest rate.


Technology Features, Specifications and Advantages

Below highlights features in contrast to existing approaches:

  • Better Trading Experience: our protocols enable transparent pricing and counter-party actions governed by the protocol and the community while providing an excellent trading experience comparable to mainstream trading services.

  • Better Automated Risk Managementpositions are over-collateralised on-chain to guarantee profit payouts and cap liabilities. When positions are at risk, they will be open to the public for liquidation with rewards, which ensure the soundness and safety of the liquidity pools.

  • Instant Liquidity: Traders trade against smart contracts, instead of order books, so that there is always instant and infinite liquidity, provided that the collateral ratio does not fall below the preset liquidation threshold.

  • Asset Efficiency: While all positions are over-collateralised, traders only need to put up collateral for the value of the positions. The rest of the risks are taken on by the liquidity providers. In return, liquidity providers earn transaction fees, e.g. in the form of a bid and ask spread in a Forex case. Savvy liquidity providers would have initiatives to hedge their risks on- or off-chain, depending on the asset type and their risk management strategies. 

  • Integrated Money Market: Assets deposited into the protocols by both the traders and liquidity providers generate interests that further increase the on-chain liquidity.

  • Tokenized Positions: Users can deposit USD stablecoins in exchange for say synthetic EUR token, which serves the following purposes:

    • as the basis for margin trading
    • as a general-purpose currency for payments
    • as a store of value, deposit to earn interest


Potential Applications

We offer a set of open-sourced smart contracts and SDKs that developers can directly build on top of. Liquidity providers can use the toolkits to deploy their own liquidity pools with their own rules and strategies to participate in this open platform. We also offer a web application for users to easily trade and interact with the platform.

Traders can also tokenize margin positions connected to their short or long leveraged positions. These tokenized positions enable fluidity across asset classes, e.g. through easily tradable fTokens and margin tokens in open markets, or as building blocks of other financial services. We can’t wait for programmers, the community and potential business partners to explore further use cases!


Customer Benefit

Our open finance platform will give people better access to trading instruments, and enable developers to build more open financial services. Specifically, it will:

  • serve both crypto and mainstream traders with instant liquidity, transparent pricing and counter-party actions governed by the protocols
  • introduce new, competitive business models to mainstream financial service providers, levelling the playing field while guaranteeing fairness and security with public blockchain protocols
  • empowers developer community to build more open finance services

OVERVIEW
Contact Person

Bette Chen

Organisation

Laminar New Zealand Limited

Technology Category
  • Blockchain
  • Financial Technology
Technology Status
  • Available for Licensing
Technology Readiness Level
  • TRL 4
Keywords

Fintech, DeFi, Margin Trading, Synthetic Asset, Open Finance, Blockchain, Money Market