We propose a partnership between AAVE and Deri Protocol and a “B2B” (wholesale) business model to AAVE. This new business model could become a strategic TVL source for AAVE in the future. We plan to deploy Deri Protocol V3 on a series of networks and adopt AAVE as the capital custodian to achieve superior capital efficiency. This will be a representative case of the lego game of DeFi 2.0.
Specifically, capital involved in Deri’s derivative trading (futures/options/powers) will be deposited into AAVE. Such capital will stay in AAVE until an LP unstakes his/her liquidity from Deri or a trader withdraws from his/her margin account. An analogy with traditional finance is how a bank plays the role of “custodian” for trading business: when a trader deposits capital for spot/derivative trading into his/her account with the brokerage, the capital will be held in a bank (the custodian). In other words, we want AAVE to be that “custodian bank” for our trading business.
This partnership could be a strategic liquidity source for AAVE as it adds a B2B (wholesale) business to your existing business model. That is, for many other DeFi (or GameFi, etc.) applications involving users depositing capital, the capital could be stored in AAVE (instead of their own liquidity pools). With the AAVE-Deri partnership as a proof-of-case, you can easily expand this B2B business to other DeFi apps by persuading them to adopt AAVE’s liquidity pool instead of their own. This is like the wholesale banking v.s. retail banking in traditional finance.
There is no development work needed on AAVE’s end for this matter. The AAVE smart contract will be used as-is. Nevertheless, we are looking for cooperation in this partnership. We might need some technical support during our development. Also, we would like to do mutual marketing promotion.
Regarding Deri Protocol:
Deri Protocol is the DeFi way to trade derivatives: to hedge, to speculate, to arbitrage, all on-chain. With Deri Protocol, trades are executed under AMM paradigm and positions are tokenized as NFTs, highly composable with other DeFi projects. Currently, Deri Protocol supports perpetual futures, everlasting options, and power perpetuals.
More information about Deri Protocol’s adoption of “external custody” can be found in Deri V3 whitepaper:
More details of Deri Protocol can be found at:
Github: deri-finance (deri.io) · GitHub
Sounds like a great proposal. I think this is a massively win/win proposal.
This will bring more liquidity to AAVE!
owsome! Continuous development of Deri Protocol, potential and powerful Defi project!
I consider the concept pretty inventive, but it would basically shake up the basic principle of lending, which is often advertised as nearly “risk-free” venture. Indeed, for the provider of liquidity, it would open up the possibility of profit-taking, with additional risk devouring the accrued yield in the worst case.
Derivatives traders could be particularly happy if they found out that their margin was being yielded at the same time, while trading or hedging. This is indeed a groundbreaking idea, but I believe the crypto space and also the regulatory framework for this is not yet as viable as you guys are as a project. Also, DeFi projects are just in the target focus of regulations.
My question would be, to what extent is Deri Protocol seeking licensing or a regulatory effort to not be hurt by regulations in the coming year and years beyond, as well as to avoid causing legal compliance headaches for both traders and liquidity providers?
Aave is on the edge of launching a regulation-compliant DeFi platform, approved for credit and liquidity service “Aave Arc”, to facilitate institutions’ participation in regulation-compliant DeFi. The trend clearly shows that we are moving away from permission-less markets more into a regulated and steadfast framework.
I find the idea very surprising, however, there is still a lot left unresolved in the regulatory, legal situation to clean up
Regarding licensing and regulation-related matters, I guess the reality is that the whole DeFi sector is generally in an uncertain and inconclusive situation. Regulators and industry practitioners are still looking for the framework for this to work out. And that is also Deri Protocol’s stand at the moment. Our mission is to facilitate derivative trading in a decentralized way. And we are open to all the possible frameworks that best support that mission.
And our proposal was come up with based on the current model of AAVE – we don’t know what direction AAVE is moving and how that would impact our adoption of AAVE. I guess that’s precisely why we need to get in touch with the AAVE team.
nice idea! Please continue to pursue it further. Both sides could benefit greatly.
deri is a very innovative project,the community members are passionate and cohesive, looking forward to working with aave.
Great sir, looking forward to the cooperation between AAVE & DERI PROTOCOL and curious about the B2B model
The “B2B” model refers to other DeFi applications storing capital into AAVE, just like what Deri Protocol would do in this proposed partnership.
Just think of AAVE as a bank. Traditionally, there are two types of depositors in banks: retail customers and corporates. Currently, most of the LPs (depositors) on AAVE are retails (whales are just large retail customers). However, there could be “corporate customers” for AAVE too – Deri Protocol for instance. Going forward, this type of “depositors” could be a strategic TVL source for AAVE, just like the corporates are important capital depositors for traditional banks.
deri is a very innovative project, the community members are passionate and cohesive, looking forward to working with aave.
Deri is cool and innovative derivatives DEX, I’m trading there since december, at the start can be a little difficult but you been compensed a few traders later, that what I love of deri is the cuantity of base tokens that you can use for trade, this is amazing!
Deri is the future, do not sleep on a high-potential project like this