Equation’s Innovative AMM Model Revolutionizes Derivatives Trading
Future Potential of AMM Models in Derivatives Trading through Equation
Derivatives trading has become an indispensable part of the crypto landscape. The development of on-chain derivatives trading protocols follows two main streams. One follows the traditional order book model of the centralized exchange (CEX), while the other, represented by the GLP fund pool model, acts as a credit model. Despite their advantages, both models have their challenges. Here we introduce a novel derivatives trading protocol that offers the same advantages of decentralization, efficiency, and transparency as the Spot-AMM and is perfectly suited for the price discovery function in the field of perpetual contract products.
The Introduction of Equation
Equation is a decentralized perpetual contract protocol based on Arbitrum and audited by third-party ABDK. With its innovative Balanced Rate Market Maker (BRMM) model, Equation enables traders to take larger and unrestricted positions with leverage of up to 200x while benefiting from lower liquidation risks. At the same time, liquidity providers can improve their capital efficiency through the use of leverage at Equation.
Advantages of the Mechanism
The BRMM concept draws its inspiration from the AMM mechanism in the spot market, with one crucial difference. It calculates the balance rate of the liquidity pool based on the temporary positions held by the liquidity providers. This rate is then used to calculate the premium of the contract price in relation to the index price.
Fair Launch and Burn Mechanism
EQU is the native token of Equation. EQU has a maximum supply of 10 million tokens, all of which are fully generated through position mining, liquidity mining, and referral mining. All these mechanisms reward the community members of Equation.
Conclusion
With all these positive impacts, BRMM successfully addresses the challenges of low capital efficiency and poor trading experience shown by AMM models in the application of perpetual contract products. The future looks promising for Equation, which has the potential to dominate the entire decentralized perpetual contract market.
About Equation
Equation is a decentralized perpetual contract protocol built on Arbitrum and audited by third-party ABDK. With its innovative BRMM model, Equation enables traders to take larger and unrestricted positions with leverage of up to 200x at a lower risk of default. At the same time, liquidity providers at Equation can use leverage to improve capital efficiency. Equation focuses on security and transparency and aims to provide traders with a reliable and secure environment for trading perpetual contracts.
Sources: AMBCrypto
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