Famous DeFi developer Andre Cronje announced a new project today called Deriswap which brings options, futures, swaps, and loans. This all-in-one protocol has the potential to completely replace most platforms, if successful. Andre Cronje announced Deriswap in a Medium blog post published on November 23.
In his post, Cronje begins by revealing that he became ‘increasingly obsessed with capital efficiency. He further states that DeFi liquidity is currently segmented and can be found on several platforms. Uniswap, Sushiswap, and Bancor now hold liquidity for token swaps, Deribit, Hegic, Opyn, and Primitive hold liquidity for options, Aave, Compound, and dYdX hold liquidity for loans, and so on.
Because of this, the developer believes that liquidity should be brought to one unique platform. To do this he developed Deriswap, currently under an audit. Andre Cronje reveals that Deriswap hosts all 3 major DeFi instruments: swaps, options, and loans. These features are all contained within one capital-efficient smart contract that enables tokens to interact with each other and create pairs.
New project includes swaps, oracles, options, futures, loans, and NFTs
As an example, the popular developer used the ETH/BTC pair to showcase all Deriswap features. For example, the token swap contract uses the same mechanism as Uniswap (x * y = k). Liquidity providers bring ETH-BTC as liquidity with which end-users can perform token swaps. Additionally, LPs earn the token swap fees for providing liquidity.
Deriswap utilizes a TWAP oracle which provides readings every 30 minutes. That way, the oracle enables the protocol to report realized variance, volatility, implied volatility, and prices.
For the options contract, Cronje used a more complex method. In this case, the values provided by oracles are used to quote Call/Put options using Black Scholes. These represent the traditional mathematical model for option pricing, nicknamed American options. Users can settle these options at any time and the settlement is based on the pair assets.
Cronje notes that calls need to be bought at the full value and that Puts should be sold at the full value as well. By combining swaps and options, he notes that Deriswap creates an interesting interaction where options represent a trade on volatility.
Deriswap allows for a consolidated, capital efficient market for trading, Options, Futures, and Loans, allowing LPs to keep their exposure and enjoy additional fees and rewards.
– Deriswap Creator Andre Cronje
Similarly, trading fees are a hedge against volatility. Furthermore, pair volatility combined with trading fees offset losses created from settled options. Cronje decided to add futures as well. They are based on the previously mentioned Options.
Loans add onto the futures as they extend and simplify them. In this case, a user also pays a premium. Naturally, loans also require the user to provide collateral to gain the borrowed assets. It is possible to repay the loan by a date selected by the user.
In the end, Cronje adds that loans, futures, and options can be tokenized via NFTs (Non-fungible tokens). On that account, it is possible to create secondary markets as well.
Andre Cronje refuses to release Deriswap smart contracts before a full audit
As Defiye previously reported, the developer hinted at the existence of a new options exchange last week. On November 19, Andre Cronje shared screenshots of what we now know to be the Deriswap protocol.
Due to his previous controversies, he decided to share no description of the platform apart from the screenshots. Now, Cronje refuses to release any smart contracts. He will most likely release the code once the auditor completes his job.