Judy_Host of EncryptClub: The ups and downs in the current market reveal our concerns about the upcoming market conditions . Will the market be more bullish? Is there any undervalued project we should participate in? What are the most lucrative concepts at the time? Can the crypo space still retain such a large amount of funds? Almost everyone is eager to know the answer, but as a cryptoer who entered into this space in 2017, i think the most sensible thing to do now is make the best use of the currrent market, such as profiting from the daily mainstream cyclical fluctuations and actively participating in projects in the primary market.
Today, we will have AMA with CompliFi, a top decentralized derivative project that has been successfully launched based the current situation and keeps improving the DeFi field. We are honored to have Dmitri, the founder of CompliFi to share more information about CompliFi project.
Welcome to EncryptClub, Dmitri. Would you please introduce yourself to the audience?
Dmitri：Hi, I am the founder of CompliFi and have been working on the project for a year. I am based in London and my background is in investment banking, where I have gained a lot of experience in financial engineering.
CompliFi team now consists of 9 people located across the world, 7 of whom are experienced blockchain engineers.
Q1: What kind of project is CompliFi? What does CompliFi do?
Dmitri：CompliFi is a protocol on Ethereum that enables users to trade and provide liquidity for derivatives, as easily as you would on Uniswap with “regular” tokens.
The whole point of derivatives is that they can do what regular tokens cannot. For example, CompliFi currently allows users to trade a derivative called BTCx5. Here is how it works:
- It comes as a pair of long and short position tokens — “BTCx5 Up” and “BTCx5 Down”
- When the price of BTC changes by 1%, the value of BTCx5 Up rises by 5% and the value of BTCx5 Down falls by 5%.
So if you think that BTC will go up and you end up being right, it is almost most always more profitable to hold the BTCx5 Up derivative than BTC itself.
Adding liquidity to CompliFi works similarly to Uniswap — liquidity providers earn trading fees when users buy and sell derivatives. Unlike Uniswap, CompliFi also algorithmically manages market risk for liquidity providers.
Q2：CompliFi possesses unique decentralization mechanism and has proposed many professional designs like CompliFi Derivative, etc. Would you please introduce CompliFi protocol’s working mechanism and product advantage to us?
Dmitri：CompliFi solves two big problems in decentralised derivatives:
1. Risk management
All CompliFi derivatives are fully backed by collateral at all times. It is really important in turbulent markets. While other protocols will try to get their users paid in full by issuing margin calls and liquidating, with CompliFi all the necessary collateral is always available.
As a CompliFi user, you will never have a margin call and your position will never be liquidated. The price you pay for a derivative is your maximum exposure. You may win or lose in the end, but you will never be asked to put up more money.
2. Market making in derivatives
Centralised exchanges have been dominant in derivatives trading because of their expertise in market making. It is very easy to lose money on this activity and until now, no one had a good solution for how to do it in a decentralised way.
We created our own unique Automated Market Maker (AMM), like Uniswap for derivatives, and want to challenge centralised exchanges in the derivatives market.
Q3：CompliFi has launched APP for open Beta. How to use CompliFi APP and ralevent functionalities?
Dmitri：With the app, our goal was to make derivative trading as simple as possible. To achieve that, we used the familiar interface of Uniswap as a basis and added some important derivatives data to help users make decisions.
There are 3 tabs in the app — Swap, Pool and Portfolio
Swap allows users to buy and sell derivatives with the USDC stablecoin.
Pool allows users to add liquidity to CompliFi. In return, they receive LP tokens (again, like on Uniswap) and can earn trading fees from all the transactions on the Swap tab.
Portfolio is where you can see all of your CompliFi assets — derivatives and LP tokens. When derivatives settle every month, you can redeem them for USDC from this tab.
Q4：It’s reported that many derivatives have been hacked recently, how will CompliFi mitigate risks of this kind? How to ensure the security of circulating pool assets for futures especailly ETH futures?
Dmitri：Security is critical for every project in DeFi. We approach it as a continuous process of self-examination, working with the best smart contract auditors and incentivising the community to examine our protocol.
So far, we had two security audits from Certik, with reports available through our website. In June, we have a new audit scheduled with Trail of Bits.
We have recently launched a bug bounty program, hosted by Immunefi.com. Details are also available on our website.
Q5：Will CompliFi launch more derivatives? What’s the requirement of derivative listing?
Dmitri：We have worked very hard to make it quick and easy to launch new derivatives.
Right now, you can trade BTCx5 and ETHx5. It takes us only a few hours to add a new “x5” derivative to CompliFi, provided that the token it is based on has a Chainlink price feed.
For example, we are considering adding UNIx5, YFIx5, BNBx5 and many more.
We will choose which derivatives to add based on community feedback — we would love to hear what derivatives you would like to trade.
Here comes free QA session. Guest can choose 1–2 lucky questions to give a brief reply.
User1: CompliFi is based on Ethereum, how to solve the high gas fee on Ethereum? Will you migrate to other chains in future?
Dmitri：Gas prices are a big problem for all of DeFi, and we are looking at all possible solutions. At the moment, the most realistic one looks to be a parallel implementation of CompliFi on a second blockchain, most likely one of the new proof-of-stake ones.
User2: Whats the role of your token COMFI in the ecosystem?
Dmitri: Our token will have a claim on the protocol’s revenue stream, which comes from fees charges to trades who are buying and selling derivatives. Also, the token will be able to actively participate in governance of the protocol.
We are in process of implementing a long term decentralised goverance mechanism to ensure that CompliFi can grow for years to come, and token holders will be in charge of CompliFi’s future
Judy_Host of EncryptClub: Thank Dmitri for joining our AMA and sharing so much valuable information with us. Thank you all for watching this AMA. EncryptClub will work hard and bring more wonderful content for you in future.