Liandaodao live broadcast room dialogue with YFX Chinese community: Analyzing the opportunities of DeFi derivatives track, challenges and advantages of YFX

At 15:00 on the afternoon of April 27, 2021, the big-name sharing session of Liandaodao's live broadcast room specially invited John Wang, the initiator of the YFX Chinese community, to conduct a special live broadcast #Analyzing the opportunities in the DeFi derivatives track: YFX challenges and advantages#. Sakura Xiaoying, the media director of Liandaodao, will have a dialogue with John Wang. Through a question-and-answer format, the hottest content in the industry in recent times will be presented to you.

The following is the interview transcript: (with some minor omissions without changing the original meaning)

Question 1: Please introduce YFX to everyone

John Wang: YFX (www.yfx.com) is a cross-chain decentralized perpetual contract trading platform based on ETH (Layer2), BSC, Heco, Tron, OKExChain, and Polkadot, providing perpetual contract trading services with up to 100 times the value of assets such as BTC and ETH. YFX innovatively uses the high-liquidity, low-slippage QIC-AMM market maker pool trading mechanism to provide users with a smooth and secure trading experience. YFX has successfully supported Layer2's perpetual contract trading services, which combines the Cefi-style leverage expected by perpetual contract traders and the liquidity and simplicity of the AMM of the Defi system. In the future, it will become a basic financial facility in the Defi field.

Question 2: What is the profound meaning of the name YFX?

John Wang: Let me first explain to you the meaning of YFX

YFX.com is a domain name that the team spent a lot of money to buy. Its full name is Your Future Exchange. Its mathematical meaning lies in the formula Y=F(x), which reminds us to always be in awe of mathematics, products, and logic.

Question 3: What are the product features of YFX?

John Wang: YFX is the only decentralized exchange that provides 100x leverage for perpetual contracts. Other current projects include: Dydx supports 10x leverage, Perpetual supports 10x leverage, and Injective protocol is still in the testnet. Only by providing contracts that can compete with centralized exchanges (100x leverage) can a truly decentralized contract exchange be realized.

YFX product features include:

1. YFX is the world's first cross-chain perpetual contract DEX that supports 100x leverage

2. YFX has the lowest handling fee among all DEXs, with a handling fee of only 0.05% and 0 funding rate

3. The YFX team only focuses on decentralized derivatives trading, and the products are more professional and convenient

4. YFX is the world's first cross-chain perpetual contract DEX that supports 6 public chains

5. YFX's contract code is open source and has passed Certik security audit, allowing users to maintain full control over their funds

6. YFX is the world's first perpetual contract DEX that supports forward, reverse and mixed

7. YFX perfectly achieves no margin call and no allocation

8. YFX adopts the leading QIC-AMM mechanism, providing extremely high liquidity and extremely low transaction slippage

9. YFX users do not need to register or log in, do not need KYC, do not need to be reviewed for withdrawals, and can freely deposit and withdraw 24/7

10. YFX already supports all wallets to open transactions. Just open your wallet and enter "yfx.com"

Among them, features such as QIC-AMM, no margin trading, and multiple public chains give YFX a more competitive advantage

Question 4: What problems does the QIC-AMM mechanism pioneered by YFX solve for users? What are its advantages?

John Wang: QIC-AMM (Quoted Index Price and Constant Integral Based Automated Market Maker) is an automatic market maker trading protocol based on dynamic depth of index price quotes and constant integrals. Under this protocol, the price of a centralized index is quoted, and traders directly quote this price to complete long and short transactions with the automatic market maker. The trading depth is related to the liquidity of the market maker's capital pool. As a DEX, why does YFX not adopt Uniswap's classic constant product pricing formula?

AMM mechanism as the source of index price?

In fact, after in-depth research and practice by the YFX team, they found that the AMM mechanism used in the pricing mechanism of financial derivatives has loopholes, which will enable smart investors in the market to engage in risk-free arbitrage, causing irreversible risks in the system.

The QIC-AMM mechanism adopted by YFX is that YFX will capture the spot prices of multiple centralized exchanges to form an index price. When placing an order, the user only needs to enter the opening cost, leverage and direction, and the system will freeze the user's opening cost. At the same time, the system will use the index price at this time as the basis and chain it together with the opening information and opening margin. Because it takes time to chain, during this period of time, due to market fluctuations, the price will have a certain deviation. Users can customize the range of tolerance deviation. When the chain price is within this range, the market maker will freeze a certain amount of margin from the available balance of the fund pool, thereby freezing it together with the user's opening cost to form a long and short position, and also form a smart contract.

Users can add a market maker pool. Users only need to deposit market-making currencies into the platform's smart contract and obtain LP Token as a voucher. Because the available balance of the market maker pool determines the upper limit of the user's opening position, YFX uses a constant integral function to calculate the depth of the user's opening position using the normal distribution function of the available balance of the market maker pool. The QIC-AMM mechanism adopted by YFX can not only ensure the fairness and timeliness of user transactions, but also ensure the security of the system.

Question 5: How does YFX achieve a seamless design on the blockchain?

John Wang: We all know that digital currency contract trading has high volatility, high leverage, high returns and high risks. In centralized contract exchanges, high-frequency trading accounts for 90% of the trading volume. In addition, digital currencies are highly volatile and prone to sudden rises and falls. Users have very high requirements for the smoothness of transactions.

However, the current blockchain technology has not made any qualitative breakthrough in the issue of transaction latency. Even Ethereum, which has the best ecosystem, takes 15 seconds to confirm each block under normal network conditions. This is a fatal blow to high-frequency or short-term traders, and is also a test of life and death for the trading system.

Compared with the instruction-driven quotation system adopted by centralized exchanges, YFX draws on the financial model of traditional financial derivatives, that is, the market maker system in the traditional financial market, where market makers provide investors with bilateral buy and sell quotations for directional transactions, and guide changes in transaction prices through the update of quotations.

YFX's automatic market maker forms a smart contract with the user's order through the QIC-AMM mechanism and is put on the chain. This not only ensures the safety of funds for users and market makers, but also ensures that the system will not be exposed to positions. In YFX, users and market makers have different leverage ratios. Through system configuration, once the index price breaks through the forced liquidation price of one party, the super manager of the smart contract will force the position to be closed, either by the user's stop loss or by the market maker. If congestion occurs on the blockchain and forced liquidation cannot be performed, after the blockchain network returns to normal, the system will still settle according to the forced liquidation price of one party to avoid the occurrence of positions being exposed in the entire system.

Question 6: After YFX successfully supported layer2, some people commented that YFX is the next Uniswap of DeFi derivatives. What do you think about this?

John Wang: The main bottlenecks of Defi derivatives are gas costs, liquidity and transaction delays. YFX.COM adopts the pioneering QIC_AMM mechanism to solve traders' problems more fairly and justly, with ultra-low slippage, ultra-low handling fees, and no funding cost rate. Layer2 was launched on March 26, which greatly reduced the user's mining fee cost and greatly improved transaction efficiency, truly bringing a trading experience that can rival or even surpass centralized exchanges.

For YFX.COM, the first principle of YFX.COM is to keep everyone's assets safely in smart contracts, rather than smart contracts hacked by others. YFX.COM's layer2 smart contract code has been audited by certik, a well-known security audit company in the United States. After receiving the security certification report from Certik, the YFX.COM technical team made some improvements to the code again and conducted several weeks of testing, with the aim of providing users with the same derivative trading products as centralized exchanges. Now YFX.COM is confident in the transaction design and code security.

YFX.COM has successfully launched a perpetual contract product on Ethereum layer2, which not only provides users with a fast, cheap and secure perpetual contract product, but also enriches the layer2 ecosystem and even promotes DeFi applications to migrate to the layer2 network faster, thereby accelerating the prosperity of the DeFi ecosystem.

Question 7: We all know that YFX has successfully supported BSC, Heco, and Tron mainnet before successfully supporting ETH (layer2), so why does it prioritize running on BSC, Heco, and Tron?

John Wang: 1. YFX develops products based on user trading needs. Although other projects are running on ETH, the handling fees are too high and most users cannot afford them. YFX was the first to propose the concept of "a decentralized perpetual contract trading platform that supports six public chains, including Ethereum, TRON, Binance Smart Chain, Huobi Ecological Chain, OKEx Public Chain, and Polkadot". The public chains that are directly launched are those with low handling fees and high speed, such as Heco and Tron. This is a great consideration for the user's trading experience. However, after supporting BSC, Heco, and Tron, YFX quickly supported layer2, which will significantly reduce transaction friction costs, increase transaction speed, and provide users with a better trading experience.

2. It is the first decentralized perpetual contract to provide 100x leverage trading. 100x leverage trading is the signature of BitMex, the creator of the centralized perpetual contract exchange. I believe that in the decentralized industry, whoever makes 100x leverage first will have the design capabilities like BitMex and may also become the next decentralized BitMex.

3. YFX's maintenance margin rate is only 0.5%, which is the same level as centralized exchanges. In contrast, other perpetual contract exchanges generally start at 5%. What does this mean? Suppose a user opens a 10x leverage to go long, and the price will return to zero if it drops 10%. If the maintenance margin rate is 5%, the position will be liquidated if it drops 5%. However, through good design, YFX can only liquidate after a drop of 9.5%. A high maintenance margin rate will only cause users to liquidate their positions early, which is extremely unfair to users.

4. YFX has the lowest handling fee in the industry, with a handling fee of only 0.05%, 0.05%, and no funding rate, which is the lowest in the DeFi derivatives track. In addition, YFX has also made an invitation mechanism. Players use your invitation address to trade, and 40% of the handling fee will be directly returned to the invitation address, and each transaction can be queried on the chain.

Question 8: In the DeFi derivatives track, what are the advantages of YFX over similar competitors?

John Wang: There are actually only a handful of DEXs for DeFi derivatives, because the technical requirements are very high. I also did a comparative analysis of the DEXs that have announced support for derivatives trading. I would like to share it with you here.

I believe that after you finish reading the following analysis and comparison chart, you will have a clearer or more comprehensive understanding of the development of current decentralized perpetual contract products, and you will have a deeper understanding of YFX. Whether in terms of basic function support or product support, the overall strength of YFX is unquestionable. This is why many users give priority to YFX.

YFX is the world's only decentralized perpetual contract trading platform that supports six public chains, including Ethereum, TRON, Binance Smart Chain, Huobi Ecological Chain, OKEx Public Chain, and Polkadot, and provides up to 100 times contract trading of BTC, ETH and other assets. The QIC-AMM mechanism pioneered by YFX can solve traders' problems more fairly and justly, with ultra-low slippage and no funding fee rate. On YFX, we hope that users can open and close positions like in centralized exchanges.

To summarize the following points:

1. Highly innovative financial model: One of the criteria for measuring whether a derivatives exchange is sound is how it handles extreme market conditions. YFX.COM's unique no-shortfall design solves the problem of liquidation shortfalls in the system under extreme market conditions. At the same time, this mechanism can also resist the delay and uncertainty of blockchain. YFX.COM has experienced several relatively large extreme market conditions, and so far, there has not been a single shortfall.

2. Rich business types: Currently, YFX has fully supported forward contracts, reverse contracts, and mixed contracts. In theory, any asset, as long as there is price fluctuation, can be traded in forward, reverse, or mixed contracts on YFX.

3. Support 1-100 times leverage: In the YFX.COM system design, users can choose any leverage multiple to conduct contract transactions, which can meet the needs of different groups of people for different leverages.

4. Interaction design: Before designing YFX.COM, we fully investigated the product designs of major centralized and decentralized exchanges on the market. At present, the page design of YFX.COM is compatible with professional traders and ordinary users, and also takes into account the usage habits of users in different regions of the world. The trading page of YFX.COM can be customized and modularized, and some modules can be separated, their sizes can be adjusted, and moved to the most suitable position. Users who have used YFX.COM can clearly feel that there is no need to check the documents specifically when trading on YFX.COM, and the learning cost is very low.

5. Cross-chain platform support: 4 major public chains are already supported, and OKEXchain and Polkadot will be arranged in succession. More public chains will be supported in the future. As long as the users are there, YFX.COM will support the corresponding public chains.

6. Asset security and data transparency

From the perspective of the entire product, YFX is currently very well done, surpassing most other projects in the industry. In particular, their design of perpetual contracts, the speed of launching eight international languages, the idea of ​​cross-chain compatibility with all public chains, and the quick implementation for users, as well as the perfect adaptation to mobile and PC versions, show that the YFX team is indeed a very professional blockchain R&D team.

Question 9: What are the ways for users to participate in YFX products?

John Wang: YFX.COM is the world's only cross-chain decentralized perpetual contract exchange that supports 100x leverage. It adds an important component to the DeFi financial pyramid and forms direct competition with centralized exchanges (CEX) in the derivatives trading track.

In any CEX, users have only one way to make money: using their experience to trade, and traders also need some luck. But in YFX.COM, users can make money in three ways.

1. Trading users can trade on YFX.COM just like any CEX and make profits from trading.

2. Some users can earn income by providing liquidity.

Users can earn part of the transaction fee by providing liquidity, because market makers act as counterparties, and the trader's loss is the market maker's profit. CEX using the order book trading model requires market makers to have extensive knowledge and experience in crypto trading and sufficient funds. There is a huge threshold for ordinary users to become market makers. YFX.COM simplifies the requirements to become a market maker by using QIC-AMM. With QIC-AMM, users can add liquidity to the market maker pool and earn passive income.

3. Users can take advantage of the promotions offered by YFX.COM.

At YFX.COM, users do not have to invest any assets in the platform to join the referral program and receive rewards. Whether you are a community influencer or just want to share YFX.COM with your friends, YFX.COM will provide 30% of the trading fee as a referral reward to anyone who recommends others to trade on YFX.COM. The referral reward has been written into our smart contract. Users will automatically receive their referral rewards after their invitees open an order.

Question 10: YFX has completed strategic investment, can you introduce it to us?

John Wang: I think everyone has seen the latest news. YFX.COM announced the completion of strategic investment by multiple institutions including NGC, SNZ, DFG Group, Bixin Capital, Youbi Capital, Spark Digital Capital, etc. These institutions have invested in well-known projects such as zil and Polkadot.

In fact, careful friends will also find that according to the latest data from DeFibox, a well-known and authoritative one-stop DeFi information aggregation and asset tracking platform, in the derivative application category, the number of 24-hour addresses of YFX on the HECO and BSC main chains were 19.23k and 10.51k respectively, ranking first and second on the list.

From the list, we can see that the total number of YFX's 24-hour addresses on the HECO and BSC main chains is 29.74K, and the total number of 24-hour addresses on the other 28 platforms is 5434. The number of YFX's 24-hour addresses is 5.47 times the total number of 24-hour addresses on the other 28 platforms. In addition, according to the latest data from DeFibox, YFX ranked first in the HECO derivatives category with a 24-hour transaction volume of US$1.83 billion, which is 1.38 times that of the second place.

Since YFX started the Genesis Mining (Phase 2) activity on the four major public chains of ETH (layer2), BSC, Heco, and Tron mainnet at 20:00 on April 6, the transaction volume has exceeded 1.2 billion US dollars in just 12 hours, and the highest 24-hour transaction volume has exceeded 1.83 billion US dollars, and the cumulative transaction volume has exceeded 3.88 billion US dollars. Compared with the 24-hour transaction volume of DEX platforms under the DEX classification of market platforms such as CMC and coingecko, YFX's 24-hour transaction volume is also ranked at the top of DEX, and compared with DEX with perpetual contract products, it is also far ahead.

Judging from the above data, YFX is undoubtedly the king of derivatives, and it is reasonable that it has won the favor of many mainstream institutions.

Question 11: Can you explain to us the economic model of the YFX platform token?

John Wang: YFX is the platform coin of the YFX cross-chain decentralized perpetual contract trading platform. The platform coin will be released in ETH, BSC, Heco, Tron, OKExChain, Polkadot and other major public chains. The total amount of YFX platform coins is 100,000,000. YFX tokens are used for the governance of the entire decentralized platform. YFX tokens are distributed in installments, where the community obtains them through mining or market-making liquidity contribution rewards. The development team and early investors only own a small part of the coins, and they will be unlocked linearly in the next few years.

This is the YFX platform currency economic model

1. 50% of the transaction fees received by the platform are used for repurchase and destruction from time to time in major decentralized currency exchanges, and all data are open and transparent.

2. No more than 50% of the risk fund can be used for the repurchase and destruction of platform coins.

3. The platform currency can be used as margin for contract trading.

4. Holders of platform coins have the right to propose, vote and govern the platform.

Judging from the YFX issuance mechanism, the YFX platform coin empowers six major public chains.

Unlike other DeFi tokens issued on a single public chain such as Ethereum or Binance Smart Chain, the YFX platform token will be issued on six major public chains: Ethereum, TRON, Polkadot, Binance Smart Chain, Huobi Ecological Chain, and OKExChain. The cross-chain nature of the YFX platform and tokens enables it to cover most of the players in these public chain ecosystems, which is the basis for the explosive growth of the YFX token network effect and an unmatched advantage of other DEXs with a single public chain ecosystem (wide potential user base and high growth potential).

From the demand perspective, the demand for YFX tokens is mainly reflected in the design of mechanisms such as repurchase and destruction, contract margin, and governance power. Below, we will look at the market demand for YFX tokens from these three aspects.

(1) Buyback and Destruction Mechanism: Deflationary Assets

The sources of funds for the repurchase and destruction of YFX tokens are mainly from two parts: first, 50% of the platform fee will be used to repurchase and destroy YFX tokens from time to time; second, no more than 50% of the risk fund is used to repurchase and destroy YFX tokens. From the destruction mechanism of the YFX token repurchase, it can be seen that the YFX token is a deflationary token, which is the biggest difference between the YFX token and other mainstream inflationary DeFi tokens. The deflationary attribute of the YFX token gives it an economically scarce value.

(2) Application scenario: contract margin

YFX tokens will be used as margin by traders on the decentralized perpetual contract YFX platform to conduct contract transactions. This shows that YFX tokens are application-based tokens. This use of YFX will stimulate many players on the platform to purchase YFX tokens, which effectively increases the market demand for YFX tokens.

(3) Governance rights

YFX token holders have the right to propose, vote and govern the decentralized perpetual contract platform YFX. This shows that the YFX token is a governance token. The governance attribute of the YFX token is conducive to increasing the market demand for the purchase or pledge of the YFX token to meet the demand for participation in the governance of the decentralized perpetual contract platform YFX.

Summarize:

1. The demand for YFX tokens mainly comes from repurchase and destruction, contract trading players, and purchases by users participating in governance. This is the basic demand for YFX tokens.

2. With relatively small initial supply and large market demand, the circulation price of YFX token is undoubtedly worth imagining. DeFi derivatives trading platform tokens enabled by the six major public chains.

YFX is definitely the leading layer2 coin!

Question 12: YFX Genesis Mining has ended. Can you explain the data to us? In addition, what is the overall development plan of YFX this year?

John Wang: There are only two stages in the creation of YFX. YFX has no private placement and no circulation, and can only be obtained through mining.

At present, the second phase of YFX Genesis Mining has been successfully completed, and I would like to share the data with you.

Those who have read the introduction of the YFX token economic model will know that the initial supply of YFX tokens in the first phase of Genesis mining is 3 million. If the 3 million YFX generated by the second phase of Genesis mining is taken into account, there are currently 6 million YFX in the hands of mining users. However, this does not change the characteristics of the small initial supply of YFX tokens and the large community demand.

This is because the total number of YFX tokens is 100 million, and the newly added circulation supply is 3 million, which actually increases the circulation supply by 3%. However, compared with the YFX token community popularity during the first phase of Genesis Mining, the current YFX token community popularity has become higher due to the brand promotion and empowerment of Golden Finance, an authoritative media in the industry. With the surge in YFX community popularity, the user base of the YFX community has also skyrocketed, and the community's demand for YFX tokens has also risen accordingly. Therefore, this 3% of the circulation supply can only meet part of the new community demand. At present, the YFX token still has the characteristics of small initial supply and large community demand. According to Metcalfe's Law, the surge in YFX token popularity has caused the network user base of YFX tokens to soar, and the network value of YFX tokens has also risen. This is just one reason why the value of YFX tokens still needs to be mined.

Not only that, the deflationary economic model of YFX token has not changed in essence. This will attract more DeFi players to participate in YFX transactions and contribute more transaction fees to YFX. In the first phase of YFX Genesis Mining, it took 13 days to create an industry miracle of $1.44 billion in transaction volume. In the second phase of YFX Genesis Mining, it created a transaction volume of $3.881 billion in 10 days. The sustainable development and hematopoietic ability of YFX are absolutely beyond our imagination.

Speaking of future market planning, as for the speed at which YFX deploys the six major public chains, you can see that it is indeed fast. After YFX launched the Tron mainnet at the beginning of this year, it quickly deployed the Huobi ecological chain Heco and the Binance Smart Chain BSC mainchain, and after launching Ethereum Layer2 on March 26, it successfully supported layer2's decentralized perpetual contract transactions. The support of Layer2 is of great significance to YFX's market dominance. For the two chains of OKEXchain and Polkadot, YFX will also launch them one by one according to product progress and development plans. Here is a preview for everyone, the V2 version of YFX is expected to be released in the third quarter. The wish of the entire YFX team is actually very simple, to allow users to truly realize contract transactions in YFX like in centralized exchanges.

When it comes to DEX from the perspective of performance and user experience, we welcome cooperation from different players in the field. YFX's focus in 2021 is to achieve global growth and attract existing centralized exchange perpetual trading users to the decentralized derivatives DEX field, thereby achieving leapfrog development.

YFX will actively provide localized products and services for Chinese users. Currently, YFX has reached strategic cooperation with wallets such as imToken, Maizi Wallet, and Token Pocket, and has reached a strategic cooperation media relationship with Golden Finance in China. Huobi Mining Pool cooperates with YFX to jointly provide high-quality mining and trading services for global users.

From the current report card submitted by YFX, we can see:

Golden Finance strategic cooperation!

TOKENPOCKET Wallet announces strategic cooperation!

Huobi Mining Pool joins YFX Genesis Mining!

YFX, the DeFi technology ranking initiated by Tron, won the first place (awarded 200,000 USDT to support the project)

Certik audit official announcement (security audit for Binance)!

Xdai officially announced that YFX strongly supports the project!!!

YFX has completed strategic investment from seven institutions!!!

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