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An Introduction Of Deriswap

BitForex Editor
Dec 03, 2020

Andre Cronje, the founder and brain behind the popular DeFi protocol "Yearn finance," unveiled a new decentralized finance (DeFi) protocol known as Deriswap. According to the founder of Yearn Finance, Deriswap is based on a protocol that combines various DeFi services like swaps, options, and loans into a single contract. Put simply, the goal of Deriswap's creation is to combine various services available in DeFi into a single capital-efficient contract, thereby allowing the interaction between two assets to make up the pair.

Andre Cronje has had his focus and attention on capital efficiency as the current liquidity is segmented. Now at the time of this writing, there is not much information regarding the Deriswap project as it is still under audit, and it still remains unclear whether YFI's founder would introduce a new cryptocurrency for the project. Cronje himself is not new to the crypto world, and ever since the launch of YFI, it has successfully gained massive traction and hit an all-time high of 43,000 dollars per token, which has, in turn, made it the most expensive cryptocurrency in the market.

Understanding Deriswap

As earlier stated, the Deriswap project focuses on capital efficiency, which is an aspect of DeFi that the founder of YFI, Andre Cronje, had clearly stated he was obsessed with. The creator of YFI is set to make changes to the current segmented liquidity, which allows users to choose from one of the Swaps (Bancor, Uniswap, Sushiswap amongst others), Loans (DyDx, Aave, Compound, etc.), Options (Opyn, Deribit, Hegic, amongst others).

Cronje described deriswap as a protocol that combines various DeFi services into a capital-efficient single contract, which will allow for the interaction between two assets that make a pair. For example; let's consider the pair of BTC-ETH.


This DeFi service is Uniswap x*y=k; in this case, liquidity providers offer ETH-BTC as an asset or liquidity. In this case, traders have the opportunity to exchange or swap BTC or ETH and vice versa. Liquidity providers earn trading fees.


The derived values above provide the opportunity to Put/Call by using Black Scholes. These options are American and can usually be settled at any period or point in time. Settlement takes place in the pair assets, so a "put" needs to sell the full value while a "call" needs to buy the full value.

The combination of "options" and "swaps" tends to have an exciting interaction as "options" is a trade on volatility while a common hedge against volatility is trading fees. A full settlement is also selected as the liquidity providers have no perpetual position on the pair itself. It becomes a permanent loss if only profits are settled; however, it becomes an impermanent loss if the underlying is settled.


In other to take readings every 30 minutes, the TWAP oracle was expanded, which will, in turn, allow for the reporting of implied volatility, realized volatility, realized variance, and price over an arbitrarily selected time series.


This extends and simplifies off of options, and in this case, you are to pay a premium and the underlying which will allow you to settle against t the other pair at a user-DeFined future date.


Loans extend and simplify off of futures; you can pay the collateral and the premium, which will, in turn, provide you with the borrowed asset.  You can take the decision to forfeit the collateral or pay up the borrowed asset before the future specified date.

Secondary Markets

Options, Futures, and Loans are all tokenized through NFT or rather Non-Fungible tokens, which allow for the trade and creation of secondary markets.

Deriswap provides the opportunity for a consolidated, capital-efficient market for trading Futures, Loans, Options, as well as allowing liquidity providers to keep their exposure and also benefit from additional rewards and fees.

The Deriswap Token

As earlier stated, Cronje explains that Deriswap makes use of the Black Scholes option pricing model to quote options. Loans are a simplification and an extension of Futures, Futures, and on the other hand, Futures are a simplification and an extension of Options. In other to obtain a loan, users or a user will have to pay a premium and collateral so as to gain access to the borrowed assets.

Similar to the numerous DeFi protocols, it is believed or rather expected that the Deriswap project will also have a token and maybe with a limited supply in circulation. As a result of this, DeFi degens are seeking to get an early start. The Deriswap protocol is, however, still under audit, and as such, there is no official Deriswap token available yet.

When Will Deriswap Launch

There isn't really any much information or details regarding the "all in one liquidity solution" otherwise referred to as Deriswap, for example, like if the protocol will launch with a native token or the date that Deriswap will debut and YFI founder at this point has declined to provide any details at this stage of the protocol. As earlier stated, this is mainly due to the fact that the protocol is still undergoing audits.

YFI's founder continues to remain a key player in the DeFi ecosystem as he continues to experiment and explore with DeFi products. Cronje might not always have recorded success as seen in the case of the "Eminence protocol," however another of his project, the "Keep3r" network, gained traction as the keep3rs token rallied more than two thousand percent with the rise in price from 10 dollars to 200 dollars within a few days.

Due to Andre Cronje's prominence and success in crypto space and decentralized finance, especially in the development of Yearn Finance, it is expected that his new project, Deriswap, upon its launch, will meet up to expectations and also perform excellently well.

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