Solana-Based Perpetual Swap Exchange Drift Raises $ 3.8 Million

Imagine that BitMEX has been decentralized and built on Solana, and you will begin to understand the Drift Pole Star Protocol. And with $ 3.8 million in fresh capital on hand, the project is getting closer and closer to its goal.

funding round was led by Multicoin Capital, with members from Alameda Research, QCP Capital, Robot Ventures, Jump Capital, Not3Lau, and a host of other angel investors.

Despite the similarities to BitMEX heavyweights, there are some key differences between the promising DeFi project and the cryptocurrency exchange which, as of press time, has run almost $ 2 billion trading volume in the last 24 hours. hours.

What is drift?

First, Drift uses a variant of an automated market maker (AMM) instead of an order book to fulfill merchant orders. choice of layout is found throughout crypto, but on most decentralized exchanges (DEX) to go for an AMM. While MMAs are gaining popularity, there is still a trade-off.

Whenever a trade is made on an AMM platform like Uniswap or Drift, traders should be aware of the annoying drift. Slippage refers to the difference in price between the placed order and the order that is being executed. During times of volatility, for example, the gap between these two figures can be large, leaving traders in trouble. Slippage is particularly noticeable on exchanges that use the AMM caral and may not have deep enough liquidity.

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Although order book operations are still slipping, the effects are mitigated by the presence of external market makers. Often, however, market makers charge a small fee to ensure that trades are executed as accurately as possible.

Herein lies the trade-off: should traders bear the brunt of slippage, potentially losing a percentage of their trade, or should market makers compensate to ensure slippage is limited?

latter is what Cindy Leow, co-founder of Drift, calls “extractable value from market makers.” Additionally, Leow and his team opted for a Dynamic Automated Market Maker (DAMM) to try to get the best of both worlds. “It offers the capital efficiency of a strong and deep market with the permanent extensibility of an AMM while giving traders the features they want, such as cross spread and leverage,” he said. “In our DAMM test network, Drift has created at least 10 times better capital efficiency than existing options on the market.”

A percentage of any slippage that inevitably occurs will go to the platform’s insurance fund, Leow said. decipher. “Slip fees will make up the bulk of the fund’s contributions,” he said. “But the trading and settlement fees will also be added to the fund.”

4 / Community Q # 1 How does the financing rate mechanism work?

insurance fund will bridge the financing imbalances between long and short. Whenever a user interacts with AMM, they pay the funds that each user owes from the user’s collateral account.

– Drift Protocol (@ Drift Protocol) July 26, 2021

latest round of funding will help provide initial liquidity to cushion any major slippage risks and secure the insurance fund.

Drift launched yesterday on an alpha mainnet, but only those with a non-fungible Drift Alpha Ticket (NFT) token can access the platform. se NFTs were distributed to early Discord users and other members of Solana’s DeFi ecosystem.

Read also Japanese financial services agency is considering stricter regulations on cryptocurrencies

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