Except you’ve been residing below a rock, you’ve in all probability heard of Divergence. Divergence is a decentralized platform for volatility buying and selling and hedging with a concentrate on digital native belongings. It has had an enormous development in reputation of late. Main backers of Divergence embody prime traders similar to Mechanism Capital, KRI, Arrington Capital, Huobi Ventures and AscendEX.
Forward of the upcoming IDO on 20 September 2021, we’ve reached out to its crew for a Q&A bit on Divergence and its upcoming developments.
Q: What’s Divergence?
A: Divergence is a platform for anybody to commerce, hedge and revenue from DeFi-native volatility. We intend to construct an ecosystem that allows the next:
- Present DeFi customers with options to guard their holding worth.
- Supply an extra supply of yield — volatility premium, along with conventional lending, staking, yield farming rewards for LPs;
- Present an easy-to-use software for merchants to revenue from asset volatility adjustments.
Q: What makes Divergence completely different from platforms like Aave or Compound?
A: Compound and AAVE are on-chain rate of interest markets, whereas Divergence is positioned to be a threat administration and volatility buying and selling platform. Rate of interest dangers that customers face from Aave or Compound may be simply managed and hedged on Divergence.
So, ultimately, we fulfilled the lacking piece of many present DeFi platforms — the flexibility to assist customers hedge dangers. It will make us good companions to current DeFi protocols.
Q: Please elaborate on who your opponents are and what’s your aggressive edge?
A: The house for DeFi choices and volatility-based derivatives is broad open in the meanwhile. There are few platforms that help choices merchandise on-chain. The main technical problem is the excessive price required to replace value quotes and run matching algorithms utilizing good contracts.
What most platforms do is to separate the minting of spinoff tokens and the market-making course of. This course of is often capital intensive as a result of LPs have to produce extra belongings on the opposite aspect of the orderbook/AMM DEX to make a market.
Divergence gives a singular answer by integrating a single-asset AMM mannequin for binary choices in our V1 platform. This permits LPs to mint, fund, and make a marketplace for choices in a single step. The created single-asset choices AMM pool can be one the place buying and selling happens. Moreover, LPs and merchants can use any fungible tokens of selection, together with LP tokens as collateral for market-making and buying and selling these choices.
Q: What are the opposite key options of Divergence?
A: We provide a easy and stylish answer that mixes our fixed product AMM mannequin with the binary choices pricing mechanism. As well as, we provide auto-exercise and auto-rollover options, which assist us create composable, steady and capital-efficient on-chain choices markets.
This differentiates Divergence from different opponents which both systematically depend on DEXes like Uniswap to swap spinoff tokens or settle trades from pooled capital with out real-time market value discovery mechanisms.
Q: What’s Divergence V1?
A: Divergence V1 is an AMM-based binary choices market for DeFi natives belongings. Key options embody
- Composability with different DeFi protocols. Liquidity suppliers can write binary choices with any fungible tokens of selection as collateral. This contains LP tokens, wrapped belongings, and belongings which might be on different DeFi layers. LPs can have increased capital effectivity with choices market-making, with out having to select between us and different DeFi protocols. This makes us a risk-management / yield-enhancing layer for DeFi.
- Market continuity: Divergence good contracts repeatedly roll over swimming pools, utilizing preset strike value degree or share above/under settlement value. All of that is completed inside a single good contract and liquidity suppliers don’t need to relocate belongings when the choices contracts expire.
- Capital effectivity. Liquidity suppliers usually are not required to over-collateralize since there’s a predetermined quantity of payout at expiry. Solely 1x collateral is required for writing a binary name and a binary put. Divergence reserves collateral for max potential claims. Say, if a pool has offered 3 binary calls and 5 binary places, 5 collateral is reserved for payout. This gives liquidity suppliers with flexibility of withdrawing capital previous to expiry.
Q: Are you able to briefly clarify what Spear and Protect tokens are?
A: Spears and Shields are tokenized representations of binary choices positions. Spear consumers make bullish bets on the underlying value or value volatility. Protect consumers do the alternative.
To position it into perspective, Spear token holders will likely be eligible to assert 1 collateral at expiry if the underlying settles at or increased than the strike. Or within the case of range-strike choices, Spear holders receives a commission when the underlying settles exterior a value vary. Protect token holders will be capable to declare 1 collateral at expiry if the underlying settlement value is decrease than the strike or inside a value vary.
Q: What nations/demographics have been prioritized for neighborhood development and why?
A: Divergence is presently centered on English-speaking nations with help for Spanish, Russian, Turkish, Korean, Chinese language and Vietnamese. Historically unique choices and structured merchandise are closely traded in elements of Asia similar to Singapore.
Nevertheless, should you take a look at the broader person participation within the DeFi market, you’d get a various group of worldwide customers. We expect the enchantment of decentralized choices has broad potentials and our product design is versatile sufficient to serve customers of several types of threat preferences.
Q: Do you will have any business partnerships in place to drive the adoption of Divergence?
Our ecosystem companions, who’re additionally pre-sale spherical members, embody P2P Capital/Lido, Terra (Do Kwon), DoDo (Diane Dai), Polygon (Sandeep Nailwal) and xDai(Igor Barinov). We just lately introduced our strategic traders together with Huobi Ventures and AscendEx. As a result of our challenge can have a variety of synergies with them, we’ll work with them as we roll out our V1 product. And we’ll announce the partnership particulars accordingly.
Along with the lead funds, a few of whom have expressed curiosity in offering liquidity as LP once we launch, buying and selling powerhouses similar to Orthogonal Buying and selling are additionally actively supporting us.
Q: When is the Divergence IDO going down?
A: Divergence will host its IDO (Preliminary DEX Providing) on 20 September 2021. The IDO will distribute our native token DIVER to the general public. The token sale will provide 2% (20 million) of the general provide of DIVER tokens via a Dutch public sale on SushiSwap’s MISO launchpad.
A Dutch public sale is a good distribution technique and a sort of distribution by which the token value opens at a better value and descends over time. The beginning value of the DIVER token sale is $0.010, and the ground value is $0.05. After the IDO is accomplished, DIVER tokens will likely be out there for buying and selling on SushiSwap. Future listings are additionally deliberate for main exchanges.
Q: What are the longer term improvement plans of Divergence?
A: Divergence expects to launch its mainnet within the fourth quarter of 2021. The Mainnet launch is anticipated to incorporate varied function enhancements and interface optimizations from its public testnet on Kovan. LPs will be capable to use any fungible tokens as collateral versus one testcoin on the testnet. Divergence additionally plans to help extra underlying pairs and enhance on the convenience of navigation and person expertise. Following our mainnet launch we’ll actively work on integrating with L2 options. Detailed roadmap may be present in our documentation.