Edge
We are excited to announce our new partnership with Avantis, marking a significant step forward in our journey toward innovating the world of on-chain trading. Over recent months, our collaboration with Avantis has focused on developing a genesis risk framework and the initial setting of parameters for their protocol.
Prelaunch Risk Research
Our journey with Avantis involved a thorough and methodical approach to researching and refining the deployment of the genesis parameterization application. At Chaos Labs, we employ advanced Agent-Based Simulation Models to balance capital efficiency and risk mitigation. Given the nascent stage of the protocol, our emphasis has been steadfastly on ensuring the security and safety of the system. This approach underscores our commitment to a smooth, secure, phased launch, aiming to establish a strong foundation for the protocol's reliable growth.
The genesis parameter recommendations emerge from our extensive research process, including executing millions of Monte Carlo simulations. These simulations accounted for a diverse range of factors, such as varying price trajectories, liquidity models, network congestion levels, and volatility. Such comprehensive testing ensures the system’s resilience under numerous potential scenarios.
Understanding Synthetic Perpetual Exchanges
Synthetic Perpetual Products are crucial in decentralized and centralized finance, designed to mirror underlying asset prices without the need for actual ownership. These 'synthetic' derivatives and 'perpetual' contracts (without an expiry date) enable continuous exposure to a range of assets like cryptocurrencies, commodities, and stocks. Traded on Perpetual Swap Contracts, these instruments utilize a 'funding rate' mechanism to align the synthetic asset’s price with the actual asset’s price. Their ability to offer unrestricted asset exposure and the advantage of no expiry renders them highly valuable in crypto and DeFi spaces, especially in restricted jurisdictions.
Our Role and Commitment
Working closely with the Avantis team, we've carried out thorough simulations leveraging their mechanisms to formulate strategic parameter recommendations with a strong emphasis on risk mitigation. Each proposed recommendation undergoes detailed scrutiny, considering its benefits and potential limitations. This rigorous evaluation ensures that our recommendations are academically sound and pragmatic, specifically addressing the unique challenges of the Avantis protocol. These initial recommendations are based on a blend of economic-security-driven heuristics, behavioral analysis from various perpetual protocols, and insights into trading patterns from centralized exchanges, among other empirical data.
Our partnership with Avantis highlights our commitment to supporting teams in pioneering the future of on-chain trading. We are excited to release our comprehensive risk parameter report soon, including the genesis risk framework, methodology, and detailed recommendations.
More about Avantis
Avantis is at the forefront of developing a decentralized leveraged trading platform, allowing users to trade synthetic crypto, forex, and commodities with up to 100x leverage. Additionally, anyone can contribute to the USDC LP pool as the counterparty for all platform trades. For more information, please visit the Avantis website.
Stay tuned for more updates and research insights as we embark on this exciting journey with Avantis!