DYMMAX: a protocol for creating unsecured cryptocurrency derivatives

Hello, we are the team behind the DYMMAX protocol, which aims to improve the cryptocurrency derivatives market and make it more liquid and established.

In the traditional financial market, derivative financial instruments, or simply derivatives, have been used for a long time. First contracts for goods with delivery in the future, similar to today’s futures, were concluded in Mesopotamia. But derivatives gained wide popularity in the 70s due to the rapid development of the world market. Their main purpose is to hedge risk. With the help of various derivative financial instruments, primary and secondary, market participants insure their positions against sharp changes in market prices. In the first half of 2019, the derivatives market was valued at $ 640 trillion (the value of outstanding derivatives contracts).

The cryptocurrency market also needs liquidity and the ability to hedge risks. But you can’t just transfer traditional financial schemes for derivatives operation to the cryptocurrency market. This is difficult due to specificity of cryptocurrencies — high volatility, a large spread between the buy and sell prices, excessive risks of complete loss of assets, and the absence of correlated assets to insure the risks of market makers.

At DYMMAX, we have developed a protocol that allows you to create unsecured derivatives for cryptocurrencies with guaranteed payments based on decentralized smart contracts. The tool utilizes a pricing model adjusted to the specifics of the cryptocurrency market and solves the problem of high premiums and the lack of the cryptocurrency option sellers.

The model differs from derivatives on centralized cryptocurrency exchanges in that it applies a shared money pool, which guarantees payouts on winning contracts.

The key features of the DYMMAX DeFi platform for creating cryptocurrency derivatives are:

  • Option sellers are not required, only buyers are enough;
  • No spread between the buy and sell prices;
  • Guaranteed payments to all participants at the expense of the existing money pool;
  • No collateral;
  • It is possible to create different options in one auction;
  • Ability for participants to create their own options.

Our mission is to create a tool that allows you to profit from all market phases: growth, stagnation or decline, for both private and institutional investors, and hedgers.

In the following publications, we will tell you more about the implementation of the DYMMAX protocol and the current stage of development.

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The DYMMAX protocol includes a platform for making transactions and working with an auction is in beta.