Future in English is the Future, but Future in Binance is the End. Surely those of you participating in the crypto market are quite familiar with this saying, right?
So why is Future still so attractive to so many people? Today, my brothers and I will learn together the origin leading to this End is a quite famous Future exchange on the Solana ecosystem: Drift Protocol.
What is Drift Protocol?
Drift Protocol is a decentralized derivatives exchange on the Solana ecosystem, with low slippage and transaction costs. Drift Protocol includes the following 4 main products:
- Traditional token trading
- Trade perpetual futures contracts
- Borrowing and Lending Services
- Provide passive liquidity to earn profits
Issues Raised in the Market Today
- Blockchain transactions are limited due to low transaction speed and scalability.
- Using off-chain infrastructure alongside the blockchain does not lead to efficiency and discourages market maker participation.
Therefore, most decentralized exchanges that use an orderbook mechanism:
Drift Protocol Solution
Drift Protocol has designed and developed an exchange that is robust, computationally efficient, and encourages the participation of market makers and liquidity providers. Trading on Drift is supported by three liquidity mechanisms:
Just in Time (JIT)
All deliveries on Drift are routed through a short-term auction (default is ~5 seconds). During this period, market makers can place bids at or above the auction price.
Auctions are conducted through a Dutch Auction and market makers compete with each other on the speed at which users’ trading orders are executed.
AMM Liquidity (AMM Liquidity)
Drift’s virtual AMM (DAMM) is a designated liquidity provider to support trades if market orders are not filled by JIT or resting orders (orders created with conditions but not yet available). done) reaches the trigger price.
AMM provides a constant source of liquidity to all traders.
Even without external market makers, Drift Protocol can still support new markets without relying on external market makers to bootstrap liquidity (albeit with added risks). ro). Many conservative measures in the design of the protocol are applied (exposure limits, use of revenue pools, insurance funds, etc.) to minimize risks in the market. All AMM needs is a trusted oracel from the spot market as a reference. For example, Drift’s SOL-PERP market needs to refer to the SOL/USD price from oracel for reference. Drift is currently using Pyth as a price reference oracle for their perpetual contracts.
Limit Order Liquidity
Drift’s decentralized order book (DLOB) serves as a third source of liquidity for the project
Limit orders are orders that are activated and executed under a specific condition.
Limit orders are created by onchain users. A Keeper Bots system will organize onchain limit orders into an off-chain order book and sort limit orders from oldest to earliest and largest to smallest.
Each Keeper will maintain visibility into its order books and monitor new orders, AMM availability, and prices from oracels. If the activation condition of a limit order is met, the Keeper will review the limit order and populate the AMM. Keepers will also connect taker orders with resting limit orders if the conditions are the same.
Keepers are also encouraged to execute orders from the longest and largest first. For their work, Keepers will be paid a portion of the fees from the takers to their user accounts.
The decentralized order book acts as a source of pending liquidity as it will sit on the order book until a taker takes it or the necessary market conditions are met and it will be filled into the DAMM.
Development Roadmap
- June 16, 2022: Introducing Drift v2
- June 17, 2022: Drift Research Competition v2.
- September 19, 2022: Launch of Hybrid Drift v2 liquidity mechanism.
- September 29, 2022: Launching the Real-time Auction mechanism (Just in time)
- October 31, 2022: Drift v2 testnet
- December 22, 2022: Drift v2 mainet on Gated
- November 23, 2022: Drift establishes DeFi Derivatives Alliance in partnership with Nansen
- November 29, 2022: Switch from Drift v1 to Drift v2.
- December 11, 2022: Listing ETH-PERP, BTC-PERP pairs
- January 20, 2023: Celebrate the new year with Drift
Core Team
The only information I found about the project’s Co-Founder is Cindy Leow, she studied at Minerva University and is currently living in Singapore.
Backer and Partners
October 26, 2021: Drift Labs raised $3.8 million in Seed Round led by Multicoin Capital. Alameda Research, Jump Capital, LedgerPrime, Not3Lau Capital (Darren & Daryl Lau), QCP Capital, Robot Ventures (Tarun Chitra and Robert Leshner) and ROK Capital also participated in the round. There are also notable individual investors such as: Jason Choi (Spartan Capital), Julian Koh (Ribbon Finance), Loi Luu (Kyber), Celia Wan (Dragonfly Capital), Dom Tsang (Solana), Hassan Bassiri (Arca), Windra Thio, Zhuoxun Yin (Coinbase/dYdX).
Tokenomics
The project has not issued tokens yet
Project Information Channel
- Website: https://www.drift.trade/
- Discord: https://discord.com/invite/fMcZBH8ErM
- Twitter: https://twitter.com/driftprotocol
Summary
Currently, with the development of the DeFi market in general and Devirative in particular, projects working on decentralized derivatives exchanges are attracting many users from centralized exchanges. Drift Protocol is the futures exchange with the highest TVL on the Solana ecosystem, recent data on Defilama also shows the project’s impressive growth.
This confirms that Drift Protocol is taking the right steps to develop itself. If you are interested in Devirative, please follow me to learn about the next projects.