What is Deri Protocol? DeFi Platform to Trade Derivatives

Deri Protocol was founded with the objective of creating a tool that allowed for real DeFi, derivative trending, composability, and openness in the blockchain ecosystem.

Derivatives are one of the hottest types of contracts in traditional fand crypto markets due to the level of abstraction they allow investors by mimicking the performance of underlying assets.

This characteristic of derivatives has made them extremely popular in the crypto ecosystem as it expands the use of tokens from being native to a network to allow the trading of traditional assets on the blockchain.

While centralized exchanges (CEX) offering crypto trading services have implemented features intended to facilitate the exchange of risk exposures but they are unable to directly interact with on-chain activities and platforms, as they are no part of the networks themselves.

By creating a derivatives trading protocol innate to the blockchain, the exchange of risk exposure could be taken to a new level that allows for seamless integration with other blockchain platforms and networks.

The evolution of Decentralized Finance (DeFi) sector is happening, and Deri Protocol is helping to shape its future.

What is Deri Protocol?

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Deri is a decentralized derivative exchange protocol that allows its users to exchange risk exposures with a high degree of precision and capital-efficiency by tokenizing risk exposures into Non-fungible Tokens (NFTs).

These NFTs can be easily imported into other decentralized finance (DeFi) projects, creating a whole new myriad of use cases and investment strategies catered to the specific needs of every investor.

Deri Protocol runs in the Ethereum Blockchain as a group of smart contracts that allows the exchange of risk exposure entirely on-chain, while also using oracles to ensure precision in the values.

The use of the Ethereum network grants the protocol immediate access to the biggest DeFi ecosystem and allows the minting of ERC-20 tokens to tokenize positions which can then be used in it.

How Does Deri Protocol Work?

Deri protocol operates in a way similar to popular Decentralized Exchanges (DEXs) like Uniswap. Deri uses pools to play the role of the counterparty of derivatives, operating as a dealer that is entirely automated by using smart contracts, allowing trustless operations to take place efficiently.

Once a user takes a position on the of these pools, a position and liquidity token are minted to represent the position of both parties involved in the trade. This token can then be used as any other digital asset by its holder, for example trading his position with another party.

The underlier’s mark price of all liquidity pools is automatically updated by the protocol’s oracle, which takes the information from off or on-chain sources depending on the derivative, making a call every time an operation takes place.

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