ArithFi

<h2 id="header-0"><strong>Introduction to the Project</strong></h2><h3 id="strong-a-what-is-arithfi-strong"><strong>a. What is ArithFi?</strong></h3><p>ArithFi is a decentralized derivatives protocol seeking to revolutionize the current trading paradigm through blockchain technology. It aims to eliminate the role of market makers and liquidity providers (LPs), thereby reducing the cost of trading derivatives at a systemic level.</p><h3 id="strong-b-product-architecture-strong"><strong>b. Product Architecture</strong></h3><p>1) Primary Trading Models</p><p>The decentralized derivatives trading sector currently features three models. The most common is the order book model, where trades are executed through traditional matching, and users act as counterparties to each other or to market makers. dYdX is a classic example. The second model involves LP pools: derivative trade prices are provided by oracles, and users transact with the asset pool; GMX is a well-known project in this category.</p><p>ArithFi represents the third model, the<strong> Smart-contract Counterparty (SCP) model</strong>, which revolves around oracle-provided prices for derivative trades, settling in token-based rather than USD-based terms, placing the user in a direct transactional relationship with the entire system (smart contracts).</p><p>For example, if a user wants to trade futures on ArithFi, they must use ATF tokens as collateral. Let&#39;s say the user locks 1000 ATF tokens to open a 10x BTC/USDT long position. If the oracle reports a 1% drop in the BTC/USDT quote, the user&#39;s loss would be 10%, and upon closing the position, the smart contract would release only 900 ATF tokens back to the user, with the remaining 100 locked. The fluctuation of ATF&#39;s price during this period does not impact the transaction.</p><p>2) Underlying Technical Architecture</p><p>Blockchain technology exhibits characteristics of increasing marginal costs. Therefore, using Layer 1 for commodities and services is economically unfeasible. As blockchain excels in asset issuance and settlement, ArithFi is committed to creating a new class of on-chain assets. Initially, ArithFi will offer trading services via servers and use blockchain for asset issuance and settlement. This approach lowers barriers to entry for early users, providing them with an experience akin to centralized exchanges.</p><h3 id="strong-financing-situation-strong"><strong>Financing Situation</strong></h3><p>The project team has conducted a seed round financing with 3% of the tokens, though the financing amount and investor information have not been disclosed.</p><h2 id="header-1"><strong>ATF Tokens</strong></h2><h3 id="strong-token-allocation-strong"><strong>Token Allocation</strong></h3><p>The total supply of ArithFi tokens is 1 billion, distributed as follows:</p><p>- 50% locked in smart contracts for token issuance, burning, and cross-chain activities.</p><p>- 15% allocated to the team and early contributors.</p><p>- 20% allocated to investors.</p><p>- 15% reserved for DAO operational activities and airdrops.</p><h3 id="strong-token-utility-strong"><strong>Token Utility</strong></h3><p>ATF, the native token of ArithFi, is used for derivatives trading, settlement, and governance within the ArithFi network.</p><h2 id="header-2"><strong>Future Outlook</strong></h2><h3 id="strong-expanding-trading-assets-and-financial-products-strong"><strong>Expanding Trading Assets and Financial Products</strong></h3><p>As indicated on ArithFi&#39;s official website, the platform plans to introduce more trading assets such as cryptocurrencies, forex, and precious metals, as well as additional financial products like options.</p><h3 id="strong-layer-2-strong"><strong>Layer 2</strong></h3><p>ArithFi is developing a dedicated Layer 2 on Ethereum to enhance decentralization and censorship resistance.</p><h2 id="header-3"><strong>Competitive Analysis</strong></h2><p>Currently, the leaders in decentralized derivatives trading by market capitalization are dYdX and GMX, with dYdX employing an order book model and GMX utilizing an LP pool model. ArithFi introduces a novel approach with its SCP model.</p><p>Here&#39;s a comparative analysis of the three trading paradigms:</p><p></p><img src="https://academy-public.coinmarketcap.com/srd-optimized-uploads/5d50890b6e33438a8b62d4b62244a9c6.png" /><p></p><h2 id="header-4"><strong>Overall Evaluation</strong></h2><p>dYdX has years of experience in decentralized derivatives exchanges, a solid technical foundation, and high liquidity, providing derivative trading value without the need for KYC. Its issue, however, is the lack of a strong value connection between the platform token and the platform itself; the absence of DYDX tokens has no substantial impact on the project&#39;s development.</p><p>GMX, as a representative of the LP pool model, attracts LP funds with high annual returns. However, its high transaction costs do not appeal to the broader retail trading market and are only suitable for a minority of large capital traders sensitive to slippage.</p><p>ArithFi, as a representative of the SCP model, stands out with its core advantage of extremely low trading costs. The benefits of zero slippage and zero trading fees are evident, and the platform token ATF captures 100% of the platform&#39;s value, aligning the interests of token holders completely with the project. Its disadvantage is that transactions are not based on a stablecoin, and achieving widespread user acceptance still requires competitive trading costs.</p><p>In conclusion, as the pioneer of the Smart-contract Counterparty (SCP) model, ArithFi exhibits innovation and unique competitive advantages. Its current market valuation is evidently undervalued, suggesting significant growth potential in the future.</p><p></p>

ArithFi Research - A Deep Dive to 0 Fee 0 Slippage Trading

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ArithFi

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