Decentralization Derivation Protocol Innovation: Can Differentiation Strategies Help Break Through?

Currently, there are two main solutions in the field of decentralized derivation: the Vault model and the order book model. The Vault model has liquidity providers as counterparties and determines the transaction price through an oracle. The order book model uses off-chain matching and on-chain settlement. Although both solutions are popular in the market, they each have potential risks. The Vault model is susceptible to oracle price manipulation, while the off-chain matching process of the order book model lacks transparency.

Currently, the on-chain derivation trading market is still in its early stages, and the market landscape has yet to be determined. How to stand out in the fierce competition is a major challenge faced by every protocol.

The derivation protocol based on the Starknet ecosystem provides users with an on-chain trading experience and security that rivals or even surpasses centralized exchanges through innovative deployment. This protocol offers various trading options for users of different levels, records all trading processes on-chain, balancing transparency and security, while also providing new users with a convenient onboarding channel and simplified procedures.

The protocol was established in 2021, and its core team members have previously worked at top global venture capital firms, managing assets exceeding $1.2 billion. The team members come from several well-known companies and are distributed across 8 countries. The protocol received funding from Starknet's parent company and completed a $4.5 million seed round of financing in July 2022, with investors including several renowned institutions and individuals.

Recent data shows that the protocol has a 30-day trading volume of 2.3 billion USD, with over 24,000 accounts created and more than 2 million transactions. One single asset's trading volume alone exceeded 300 million USD.

The innovation of this protocol lies in dividing transactions into two modes to meet different user needs. One mode introduces gamification elements, providing a simple and fun trading experience for short-term and swing traders, including 30-minute trading competitions and visualized real-time trading data. The other mode is aimed at experienced traders, offering various order types, complex trading features, and advanced tools. Although divided into two modes, they share the same on-chain order book, ensuring liquidity and depth.

The protocol perfectly balances performance and security through a self-developed application chain. The application chain is a full chain layer developed based on the Substrate SDK, seamlessly connecting users to multiple L1 and Rollups. The order book operates entirely on the application chain, allowing transactions to be unaffected by on-chain speed and Gas costs. Even when the main chain is congested, users can still enjoy gasless transactions and continuous liquidity. All transaction records on the application chain are traceable and queryable, enhancing the degree of Decentralization and transparency.

To lower the entry barrier for new users, this protocol has integrated account abstraction functionality first. Utilizing Starknet's native account abstraction and cross-chain bridges, it simplifies the process for users to access funds. Users can seamlessly bridge to Starknet and start gasless transactions directly. This account will also become a one-stop hub for users' DeFi applications, including features such as staking and other DeFi products.

The protocol also developed a native cross-chain bridge, composed of smart contracts on Ethereum and Starknet. Through the L1-L2 messaging mechanism, users can seamlessly transfer funds between L1 and Starknet. This not only facilitates user deposits but can also be used for airdrops and NFT activities, opening up the flow of funds in and out.

The potential of the decentralized derivation trading market is enormous, with expectations to reach a scale of tens of trillions of dollars. Currently, the market landscape has not yet been determined, providing breakthrough opportunities for innovative projects. The core advantage of this protocol lies in its use of a decentralized order book, combined with high-performance application chains and account abstraction, to provide users with a secure and seamless service experience. It aims to address the issues and risks of existing protocols and become a strong competitor in the decentralized derivation track.