Let’s dive deeper into the main components of Derived Finance.
Derived Finance will be derived based on the Substrate framework. We will make use of the highly customizable framework from the substrate to build on the Polkadot with plans to have interoperability on multiple chains. The Polkadot ecosystem provides innumerable advantages over Ethereum. The native tokens of the network will be DVD. The Emission Curve along with staking rewards in blockchain and staking rewards in protocol will be explained in the Token Economics section later.
Protocol Overview:
These are the following main roles in the derived finance protocol:
· Protocol Staker: Protocol Staker is a user that stakes either LP Tokens or DVD tokens in order to earn staking rewards as DVD tokens. There will be no penalty to withdraw the LP tokens staking or DVD tokens staking. However, to encourage users to stake the LP or DVD tokens, the token emission will be more rewarding in the bootstrap phase. Once sufficient liquidity is gained, the curve will smoothen out the rewards.
· Trader: The trader is the one who trades the synthetic assets on the decentralized exchange on the derived protocol. The trader pays a fee of 0.3%, which will be distributed to the LP tokens/protocol token stakers.
· Liquidity Provider: The Liquidity provider provides liquidity to the equal amount of DVD tokens and stable coins to the liquidity pool. They can then use these LP tokens to stake in the protocol to earn more DVD tokens.
· Governance Voting: Any new proposals to change the protocols, any proposal to fine-tune the parameters, or whitelisting of new synthetic tokens will be done via on-chain governance voting. We will make sure the threshold of governance voting is not so high so that even in the initial bootstrap phase, users can vote on proposals.
We presented the concept of synthetic tokens to be issued on the blockchain with zero friction and has the potential to break the barriers of geography — which will enable people from all over the world to invest in the synthetic asset class. We hope you will join us in this exciting journey.
Derived — Keep up to date so you don’t miss out on any news!
