DeFi has been a very hot topic in 2020 and reminds us of the ICO boom back in 2017, which garnered exuberant speculation and allowed investors to rack up millions in profits within hours. What makes DeFi even crazier is that most projects don’t even put the effort to come up with an idea or write a white paper. All they do is create a token and offer it for staking. Unsuspecting investors would jump in without doing due diligence to start farming, and before they realize it, there’s no real-world use of the token. In the end, token creators have already made enough money for themselves and disappeared.
All the excitement in defi has done nothing but attract scams and get rich quick schemes in the space which is clearly not sustainable. So the question is – are people still developing legitimate DeFi products? Absolutely. There are still new DeFi projects that are developed to add more value to the space such as DYMMAX.
What is DYMMAX?
DYMMAX is an abbreviation for Dynamic Market-Making Auctions and Exchange and serves as an innovative protocol that allows for the trading of decentralized options without collateral. The tool can be used by hedgers, retail, and institutional investors to make a profit regardless of which direction the market goes.
The DYMMAX protocol was created to address three key areas of the decentralized derivative markets: insecure contracts
Some decentralized option platforms do not have settlement centers that control the loss and profit of traders. As such, the buyer of the option is forced to ensure that the amount he contributes to the contract actually corresponds to the strike price. Meanwhile, the seller on his part is compelled to contribute the underlying asset under consideration. As a result of this process, a significant portion of the underlying asset is blocked in the smart contract (when concluding the contract for the ATM strike) before the option is exercised.
The problem of high premiums arises mainly when a seller is not able to hedge risks for the underlying asset, but could also result from the need for fully collateralized contracts.
The problems of high premiums and contract security eventually lead to the problem of low liquidity. This explains why some traders would prefer to trade derivatives on centralized exchanges as they can benefit financially from high return on equity through low collateral.
How DYMMAX works.
The DYMMAX protocol is founded on the principle of parimutuel betting with fixed odds and includes an algorithm that is developed to match all market orders received at the time of auction. The way options are issued with the DYMMAX protocol is very different from how it’s done with the classic exchange model. With the classic model, each market maker within an option contract quotes the contract with a certain spread from the anticipated computed volatility.
With the DYMMAX protocol, however, a system is developed wherein auctions are automatically prolonged within 24 hours.
Before the execution date immediately after the end of an auction, all existing contracts are in the form of ERC-20 tokens and are tradable for free.
Advantage of the DYMMAX protocol
– Lets the trader to get leverage of up to 20:1.
– Allows all market makers to effectively manage risk.
– Ability to instantly take profit in the secondary market.
– Allows participants to insure their portfolio in the long run.
– Enjoy significant risk reduction whenever the market goes in the opposite direction.
– Whether the market is falling or is at a standstill, traders and investors would still make a profit.
– Allows market participants to tokenize all available options.
Community and partnership.
The DYMMAX team believes that the best way to develop a project that is sustainable in the long run is to get the community involved. That is why all DYMMAX token (DMX) holders are given the opportunity to have a say at all levels of the project’s development. This will be done through community voting to ensure that each feature that is being added to the DYMMAX ecosystem is backed by the majority.
Just like how community involvement is paramount to the success of DYMMAX, so too are partnerships. That is why in the very early stages of the project, they have already gone into partnership with Probit. For those who don’t know about Probit, it is one of the top cryptocurrency exchanges and processes up to 1.5 million orders per second. Plus, 95% of all cryptocurrencies are kept in cold storage. With regard to securing user accounts, the exchange supports FIDO U2F technology together with software two-factor authentication.
To sum up, DYMMAX is a revolutionary derivative platform that allows for the trading of decentralized options without collateral. Even though similar platforms have been operational for some time now, DYMMAX has solved some key problems that its predecessors were unable to address namely: high premiums, low liquidity, and insecure contracts.
Company: DYMMAX LP будет
– low premiums
– high liquidity
– 100% contract security
Or it solves problems of:
– high premiums
– low liquidity
– insecure contracts
In this section pros and cons are mixed together, and DYMMAX protocol properties are non-obvious
We need some conclusions about DYMMAX here. Right now the last paragraph of the article tells how cool is Probit, but it is not the idea we were willing to tell
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