Recapitulation of AsteriaProtocol PROJECT AMA event held at AMA LOVERS CLUB.
Date: Monday, 19th July, 2021
Time: 14:00 UTC
The AsteriaProtocol PROJECT team was represented by @Felipe_Bernardo_Theodoro who judiciously shared with us detailed knowledge and information about AsteriaProtocol PROJECT.
1st Segment: INTRODUCTION
Q1: First of all, Felipe, could you please introduce yourself and your working experience in blockchain?
ANS: I’m Felipe, Community manager of the Asteria project. Pick up your ears now. I’m going to share with you probably the last golden track in the DeFi field——Option Market and the leading protocol of it ----Asteria.
Team Asteria is composed of the world's top technical and financial experts and a professional marketing operations team. Michael, CEO of Asteria, has extensive experience in derivatives quantitative trading and DeFi protocols. He worked in Bridgewater’s derivative quantitative trading department, JP Morgan Chase’s data management, the Fed, and other prominent Wall Street financial institutions. His deep research in DeFi began in 2019, where he incubated and participated in several top DeFi Projects.
Dr. Levi, our technical consultant, earned his Ph.D. in pure mathematics at the Israel Institute of Technology. Ori Cohen, Asteria’s product consultant, is co-founder of Efficient Frontier and CTO and expert in options products in Broad Digital.
Q2: Could you please tell us more details about Asteria Protocol?
ANS: In a nutshell, Asteria is a new decentralized option protocol with some world-leading system designs and technical implementations which includes being the first one to realize a risk hedging module for options automated market maker under Peer-to-Pool trading mode. Asteria is committed to creating a low-threshold, low cost, high yield, and increased liquidity option trading experience for all types of DeFi users.
Asteria has three distinctive features:
(1) First, the AMM mechanism under Asteria’s peer-to-pool trading mechanism solves the liquidity fragmentation problems of centralized option trading platforms. The infrastructure of Asteria ensures option parameters customization and automated/instant trading functionalities of .. This dramatically improves the trading experience for users compared to centralized options exchanges.
(2) Asteria designs and implements the professional and unique dynamic hedging system, ensuring stable yieldsand reducing risks for LP users.
(3) Asteria’s professional pricing model allows options fees lower than the market average, providing a better trading experience for users.
And let me introduce our initial in-depth cooperation projects:
(1) API3: Asteria will not only obtain the trustedprice of the underlying without any delay from API3 and also become one of their airnodes to provide professional volatility data for all options market and becoming the industry’s benchmark.
(2) Metis: Metis Provides high-functionality, high scalability, and low cost decentralized Layer2 solutions and DAO management framework inputs for Asteria.
At present, angel round investment institutions include LedgerPrime, FBG, Evernew Capital, etc.
LedgerPrime is a well-known quantitative institution on Wall Street that focuses on derivatives trading and investment, especially on options markets. Their recognition of Asteria represents the endorsement of the professionalism of the team.
We believe that more great investment institutions will choose Asteria in the latter half of this year.
Q3: Asteria is very innovative. Why did you choose to do DeFi options? What are its advantages over other DeFi option projects?
ANS: An option is a derivative contract in which the buyer and seller have unequal rights, and here is where things get interesting.
Classic European options give the buyer only the right, not the obligation, to exercise the option at the agreed time; that is, the buyer can choose whether to exercise the contract or just walk away at the expiration of this option. To have this special right, the buyer needs to pay a small fee to enter the contract. That is to say, from a buyer's perspective an option is naturally a leveraged product, a kind of investment with low cost and high yield possibility. Meanwhile, in the traditional financial markets, options are often used for hedging tools in a portfolio.
The most prominent feature of the cryptocurrency and DEFI market is that the price fluctuation is relatively high, so the option is an essential risk hedging tool to protect the investment orveral.
In the scenes of DeFi specifically, there are many exciting scenarios for options, such as the hedging Impermanent Loss on Uniswap, the hedging of rate fluctuation in the yield aggregator, and the hedging of the price expectation underlying in various mining algorithms. Also, options can be designed as structured financial products, a valuable tool for cryptocurrency insurance and financial management.
But how big is the crypto option market right now? Let’s have a look at the data. As a leading contract trading platform, Binance 24H perpetual swaps trading volume had exceeded $36 billion. While Deribit, THE leading options trading platform, its trading volume is only about $500 million/24H. We can also see the enormous development potentials of the size of the options trading market.
Now, you might ask: given the high yield and flexibility of options, why are options trading still not very popular among traders in blockchain?
Straightforward reason: in practice, there are only traditional European/American options in the industry; the learning curve for zero-knowledge users is too long . The complex interfaces, operational steps, elusive concepts like premium, volatility, time value, intrinsic value establish a very high threshold for options trading. So for many new users, even if they’re willing to trade options, the complexity will drive them away.
Asteria is aware of those pain points. Based on the classic European and American options and the deployment of a complete pricing,hedging and tradng module, Asteria has designed more products that are easy to use and straightforward to understand, and more important to solve the actual needs of different group of market participants
For example, our Impermanent-Loss-Hedger, which is about to be launched, is quite crucial for all liquidity providers in the spot market. Another example is our step options designed specifically for entry-level investors, making it easy for beginners to gain profit by predicting only the direction and the volatility of underlying as short-term trading. We also designed hedging products for miners and financial products for token holders. In short, our goal is to attract every participants in crypto and DeFi industryto the options trading market, because everyone can find option helpful for his/her situation, and eventually ignite the entire market.
Q4: What unique and professional design has Asteria adopted in the architecture of its system?
ANS: What I’m saying next could be a little hard to understand, but once you know what this is all about, you will benefit a lot!
Asteria provides the most professional trading experience for both new option traders and advanced traders with five unique features.
(1) Risk management system: Asteria introduced Aggregative Delta-hedging Engine to options trading. Through financial engineering and an in-depth understanding of other DeFi protocols, this engine has dramatically improved the capital efficiency of its Liquidity Pool.
(2) Asteria uses different option pricing mechanisms for corresponding options products: Asteria uses mathematical models like the BS model the Monte Carlo method, etc, combined with the practical features of DeFi development, and designed professional and accurate pricing mechanisms for different options products.
(3) Diversified options products: Asteria supports customized options trading, and it will attract more traders with multiple speculative and hedging purposes. And because of the variety of options structures and products, market makers’ delta positions will offset each other, reducing hedging pressure.
(4) Flexible application of NFT functions: Asteria uses NFT tokens of the ERC1155 protocol which supports the operation of unlimited quantities and types of NFT within one smart contract. Asteria map the rights and obligation of option contract for seller and buyers . With the function that NFT can be combined and divided,professional traders can synthesize structured options, which significantly enriches , trading scenarios, and trading logic in the options market. Meanwhile, NFT also supports the economic model of the system as a mining hashrate.
(5) Layer2 integration: Asteria will be built on Layer 2’s cutting-edge solutions, which will significantly reduce the cost of buying and selling options and pledging assets. This is something to look forward to.
To sum up, Asteria built the most advanced decentralized risk management system to improve peer-to-pool options trading protocol.
Q5: But that does not dispute the fact that Options trading can be challenging for new user.
so how can they quickly start trading on Asteria?
How easy is it for new users to start using Asteria?
ANS: Compared with futures, options have the following advantages:
(1) Options can synthesize futures contracts, but futures contracts cannot synthesize options.
(2) Classic options will not be liquidated: no matter how much the price fluctuates, the position is still there.
(3) Options can be profitable regardless of market direction: with a combination of options and contracts, users can earn profits based on volatility.
(4) Options have no funding rate: perpetual contracts charge funding fees.
(5) Options are highly leveraged: up to 200 times leverage is possible.
We’d like you to join our Asteria telegram group https://t.me/asteriaprotocol. We will teach you options trading strategies for free. Whether you are trading on Asteria or not, you may want to join our community to learn some options strategies first.
So, if you ask what the advantage of Asteria for beginners is, the first one is that we will have products that are interesting and professional. First, let me give you a brief introduction of our Asteria Step Option:
Asteria Step Options include StepUp options and StepDown options, which meet users' two-way demand for a bullish and bearish market. Based on the 15-minute option period, Asteria's automated quotation system will quote five times in the first five minutes of the 15 minutes, fluctuating with the price of the underlying at one-minute intervals for users to choose from. After purchasing step options, the user can choose the settlement time independently within 10 minutes after the buying window closes. Asteria’s step options function is embedded with a very high level of DOF. This step option function has a three-step structure, convenient for users to manage market risks and make directional investments accurately.
The StepUp and StepDown options yield structure is as follows:
Also, our team is made up of skilled and experienced options traders. Therefore, we won’t make our products less professional to entice beginners to trade. On the contrary, our philosophy is to let them follow us and learn to be more proficient in options trading. And our tutorials will be objective but not cold, severe but not inflexible, brief but not shallow. For example, we will even write a series of hip-hop music to interpret options trading rules. The threshold of options trading cannot determine whether you lose your money or make huge profits. The critical point is, you need to understand it fully.
Ask yourself: if you can learn options trading and learn it well, what else can you not do?
2nd Segment: LIVE Questions
Q1: In the decentralized options, investment area platforms such as Opyn and Hegic have also appeared. In contrast, what are the unique advantages of Asteria?
ANS: Opyn applied the spot Swap AMM solution. It fails to solve fragmented options liquidity and imposes unavoidable impermanence losses for market makers, the Achilles' heel of DeFi.
Hegic is, for now, the project with the highest TVL under the Peer-to-Pool model. Still, it does not integrate hedging into its designing and backtesting system, exposing all market maker capital to the crypto market risk with much higher volatility than the traditional financial market. Thus, moreover, the competitiveness and safety of the shared capital pool is not guaranteed. At the same time, the gap between the tens of millions of TVL and the hundreds of thousands of daily transaction volume makes Hegic's TVL return rate, without mining, become very low, which is not compared with other high APY DeFi projects. Competitiveness amongst these products is substantial, so it will inevitably lead to the loss of funds and the drying up of liquidity.Asteria adopts the most professional and advanced model in risk management within DeFi's aggregation income module for option sellers. As a result, market makers will not only secure their funds but also obtain excess returns.For option buyers, Asteria's pricing model is more professional than Hegic. Thus, on the one hand, it can offer buyers a reasonable price, and on the other hand, it provides a solid theoretical basis for hedging.
Q2: If I want to invest in Asteria, how can I do it? And what kind of people are suitable for investing in Asteria?
ANS: There are three ways: (1).Institutions and individuals with significant funds or resources can participate in our second round of financing. (2).Before Asteria’s mainnet launch, we will give some rewards to users who have made contributions to the Asteria ecosystem. These contributions are mainly: participating in community building, sharing options knowledge, reporting bugs under testnet stage, deep participation in Asteria’s testnet, etc.(3)In addition, there is an essential part of the DeFi world: mining. After Asteria’s mainnet launch, we will start the liquidity mining, NFT mining, and other functions. By buying each option contract, users will get an exclusive NFT. Except for the NFT mining function, please allow me to keep the details of this NFT in secret :) Our mining mechanism is designed according to a rigorous mathematical model, divided into liquidity mining of the seller and transaction mining of the buyer, etc. A great pleasure to forward to.
By the way, we welcome everyone. We’re committed to building a decentralized world and building the infrastructure of the DeFi world.
Q3: what would you say to our Asteria fans about the current market?
ANS: In my opinion, the current market is very similar to the market of 2018. The last bear market in 2018 fertilized the perpetual contracts represented by BitMEX and OKEx. This time, DeFi and options become opportunities for everyone to make big money. So keep an eye on Asteria in the latter half of 2021. This is one of the few opportunities that you must grab.
For Asteria’s fans, I have two suggestions:
First, experience our products in depth while upgrading and making more progress, learning in advance, winning the first advantage, and reducing the later learning cost. Then, when others just start to learn, you can already buy options and make profits expertly.
Second, make a horizontal comparison of products in a bullish market, including spot and derivatives products. Understand the characteristics of options trading, then rebalance your portfolio by making options’ advantages complementary to other products. In this way, you can limit the risks and increase your profit.
Q4: How do you solve liquidity issues and how to ensure user assets and systematic security?
ANS: Peel-to-Pool trading mode resolved the liquidity issues: shared LP capital pool integrated the liquidity by providing opposite positions for buyers; Asteria built a professional, comprehensive, and stable pricing and hedging system for all automated market makers.
Asteria applies a comprehensive risk management system to handle asset security, including Delta risk, Vega risk, Gamma risk, liquidity risk, and credit risks. Details can be found in our white paper embedded on the official website.
For systematic security, an experienced security expert from Team Asteria have multiple anti-hacking mechanisms:
Re-Entrancy Attack: External calls from Ethereum smart contracts can be hijacked by attackers whereby they force the contract to execute further code (i.e. through a fallback function), including calls back into itself. Asteria chooses to introduce a mutual exclusion lock. The ReentrancyGuard contract in the OpenZepplin component library implements this scheme well.
Arithmetic Over/Under Flows: Over/underflow of numerical caveats allow attackers to misuse code and create unexpected logic flows. Similarly, Asteria will use OppenZepplin’s SafeMath to avoid insufficient/overflow vulnerabilities.
Default Visibilities: The default visibility for functions is public. Therefore functions that do not specify any visibility will be callable by external users. Asteria always specifies the visibility of all functions in the contract. Recent versions of Solidity will now show warnings during compilation for functions that have no explicit visibility set, to help encourage this practice.
Floating Points and Precision: Asteria knows that it is very important to maintain the correct accuracy of smart contracts, especially when dealing with ratios that reflect economic decisions, so Asteria will ensure that any ratios used allow large molecules in the score.
Another strategy is to pay attention to the order of operations. The different calculation orders of multiplication and division will produce different precision.
Finally, when defining arbitrary precision for a number, Asteria will convert the variable to higher precision, perform all mathematical operations, and finally convert it back to output precision when needed.
Q5: What stage is Asteria in right now, and do you have any specific events recently?
ANS: Now Asteria is under the testnet stage. The Asteria testnet launched last month. And the latest version, BetaV1.1, has launched this week, so you can now fully experience Asteria’s options trading process. Asteria’s next milestone will be Layer 2 testing and launching more option choices, so stay tuned!In terms of events, during the testnet stage, users who have tested options trading on Asteria or who have made outstanding contributions will receive the corresponding mysterious reward after the mainnet launch. Besides, we’re holding various trading(or other) events with airdrop rewards in our community.
We will have an event after AMA, for 8 multiple-choice questions you will have a chance to win a prize of up to 40 USDT.
How to claim:
(1). Join Asteria official telegram group, https://t.me/asteriaprotocol, answer 8 multiple-choice questions
(2). Follow our Twitter @AsteriaProtocol
(3). Only the first three people to answer each question correctly can win 5 USDT
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