Edge
Chaos Labs & Ostium Labs: Advancing DEX Innovation
We’re thrilled to announce our partnership with Ostium Labs! We’ll be working together closely to improve their mechanism design and create a risk modeling and monitoring system for the Ostium Protocol. Our foremost priority will be to ensure their system's robust and secure functioning to help bridge the gap between on-chain trading and off-chain asset offerings.
Research, Robustness & Economic Security
A core component of our collaboration is the research phase, which is currently underway. This phase will focus on refining the Ostium Protocol’s mechanism design, particularly evaluating the fee structure and its influence on user behavior. Through agent-based simulations, we’ll provide insights into the system dynamics and potential areas of improvement. In addition, our team will help ensure the protocol design properly accounts for the unique dynamics and features of Real World Assets to maximize economic security.
Ostium’s Vision for Real-World Assets
Currently, “Real World Assets” are synonymous with tokenization in DeFi, focusing on offering yield-maximizing solutions to long-term holders rather than catering to the needs of traders. As capital flows onto blockchain rails, traders increasingly seek diversification and exposure to a growing universe of assets. Yet, from forex pairs to commodities, most diversifying assets in the traditional markets are inaccessible on-chain. Further, despite the volatile macro environment’s increasing influence on market dynamics – from geopolitical uncertainty to evolving interest rates and inflation – on-chain traders have little opportunity to express their macroeconomic views outside directional bets on large-cap crypto. On-chain exposure to a diverse set of Real World Assets will allow traders to build a more diversified portfolio and express granular views on the macro developments that shape markets.
Beyond that, many traditional markets Ostium will soon offer on-chain are plagued by centralization, inefficiency, and a lack of immutability and accessibility. The team believes tangible or “real-world" assets are overdue for a technological upgrade. Blockchains are uniquely poised to facilitate this transition by enhancing transparency, facilitating fractionalization, and democratizing access. Both teams strongly believe that long-term market activity for the vast majority of asset classes will transition on-chain — and are building towards that future.
User-Centric Focus, Risk Management & Tooling
After our initial research phase, the core of our work together as a team will focus on building a risk monitoring system and simulation platform to track core protocol metrics in real time. This risk portal will be publicly accessible, allowing anyone to simulate market events like large drawdowns in asset pricing and assess their potential impact on the protocol. The simulation platform will power real-time risk parameter recommendations in response to fluctuating market conditions and trader behavior. We’re excited to help increase protocol transparency and equip Ostium’s community of users with critical tooling.
Our partnership with Ostium Labs is a testament to our commitment to continuing to help teams build the future of on-chain trading. We’ll be sharing more news and research soon!
More about Ostium Labs
Please visit Ostium Labs' website to learn more about the Ostium Protocol and its Real World Asset-focused DEX.