Development Team's Thoughts

DeFi adoption and market participation would increase significantly if users understood some key points around this emerging market. Derivatives play a major role in the continuation of economic growth. As a tool, derivatives reduce risk exposure, which is a major part of protecting earnings and building a sustainable portfolio. Derivatives enable strategies that are not possible with spot assets.

Additionally, derivatives serve as an essential tool for price discovery of the underlying assets. Users should understand that derivatives offer a significant advantage in hedging risk exposure, contributing to market efficiency, and having access to otherwise unavailable assets and liquidity.

In building common ideas, this overview takes the time to explain notions that can appear basic in finance but have been misrepresented in the crypto space with much misleading information. Every claim and suggestion made in this whitepaper is subject to our interpretation and assumptions.

DEUS has been built by idealists seeking to decentralise everything. All are invited to become apart of a diverse range of users to share their experiences and thoughts on this system to enable us to build products and services that best meet the needs of these users.

The role of derivatives

Different types of institutions utilize derivatives to increase the yield of certain assets, reduce risk, take advantage of arbitrage opportunities, market making, and take positions. They are an excellent tool for market participants to gain access and exposure to a broader range of assets and strategies. The more participants, the broader the range of potential products and the customizability of said products. Increasing the range of derivatives would bring diversity to the digital asset market and make it more resilient. Market participants tend to seek more exposure while reducing risk. Increasing the hedging possibilities can also encourage price discovery and liquidity of assets composing the market by driving bonds, farming, and yield products.

Derivative products can be used to enhance portfolio efficiency. By allowing trading with cross margin on credit, foreign exchange, IR, equity, and stocks, all from one place with the same margin, users can create portfolios with more diversity.

Market efficiency

The derivative market can be split between market makers (MM), who provide the market, and end-users, who use the market. DEUS is building a protocol where endusers can request quotes from MM’s directly. DEUS’s vision includes derivative market liberalization, increased access, and financial reform.

DeFi has shown efficiency in creating a permissionless market for loans and automated market makers (AMMs), however, there are no permissionless derivative protocols that are sufficiently efficient. The more use-cases there are for derivatives, the more volume will be attracted to the market, and the broader the derivative use-cases become.

Permissionless system

To be permissionless and censorship-resistant, a derivative protocol needs to be scalable, flexible, and devoid of any central party capable of denying access to participants or choosing the rules for their users, otherwise, the central party always ends up dictating limitation rules because of conflicts of interests.

Neutral oracles are the key to being permissionless. They allow smart contracts to receive input, meaning that, ideally, all parties need to agree on a price before any trade can occur. Because we cannot wait for an agreement between each party, those that behave dishonestly must incur a penalty. A broader set of data availability grants new types of derivative products that can reach a broader audience.

The over-the-counter (OTC) derivatives share of the market is directly impacted by the inefficiency of the underlying asset. Our Master Agreements are designed to comply with regulations. Regulations are important but each regulation should be in free competition, allowing any participant to create their own regulations. It should also be considered that between regulators, it is possible to engage in cross-margin under certain conditions, allowing, for example, a cross-margin between stocks of two closed countries. Access to the OTC derivatives market is enhanced by allowing a broader range of participants, including retail investors, to open foreign markets without the need to wait for government regulations and by simplifying the OTC trading process, the general market framework is improved.

Transparency

A transparent market promotes increased liquidity, coupled with increased efficiency, which leads to improved asset pricing. When market participants have more trust in a market and less fear of the unknown, participation and liquidity increase, increasing efficiency. The more efficient a market is, the more accurate an asset is priced, decreasing the risks of pump-and-dumps.

On-chain activities mean users and traders have transparency and knowledge of MM’s activities, increasing trust in the market. The more data available to analyze a market, the more trust users can have in phases of uncertainty, resulting in less reactionary trading. This results in a decrease in volatility, creating a feedback loop of trust in the market. Free competition between market makers, risk management tools, defined market rules, and infrastructure, makes for a more attractive and efficient market.

Automation

Automated, simplified derivative products promote growth in the market. The current DeFi framework doesn’t allow for complex financial products due to a lack of oracles and not being able to compute complex functions. By creating a complex framework that behaves automatically, resources are freed up to focus on vision and innovation rather than constantly building infrastructure. DeFi products that reduce risks, such as using options and shorts as hedging strategies, help to build a robust DeFi portfolio. Additionally, this attracts TradFi to the DeFi market due to decreased risk and the option of taking large positions.

Introducing close-out netting across all blockchains promises to be a massive improvement to the current TradFi model. Currently, parties need to ask for a daily settlement on open positions because they cannot trust counterparties to be able to pay themselves after more than one day of market deviations. In blockchain, however, this is not a concern. Close-out netting closes all transactions at once in case of liquidation before a party is truly defaulting and transfers cash flow to each party eliminating the risk of loss.

One of DEUS DAO’s key future roles is the education of practitioners in the areas of law, computer science, and statistics, in programming derivative contracts. Additionally, by reducing operational costs for building, allocation is freed up for product development and innovation.

The DEUS Vision

DEUS finance aspires to bridge the crypto-economy and the traditional markets on a decentralized platform. It will make investing much easier and more accessible to everyone. It does so by minimizing the trust normally required between parties in a transaction, through the use of decentralized blockchain systems, including oracles and open-source algorithms.

Essentially, we are crowdsourcing and DAO-governing the future of financial investments.

To quote Lafayette, one of the early initiators: “It’s not just about cryptocurrencies. In the future, you will be able to trade almost any verifiable financial instrument on the blockchain, without barriers to entry. Anyone will be able to trade available stocks, indices, and ETFs, with the full transparency and anonymity of cryptocurrencies. Imagine a DEX where you can trade TSLA. That is what DEUS aims to become.”

The System

The DEUS system allows for oracle-verified mirroring of crypto and non-crypto assets, as well as the creation of asset-backed baskets. One of the first external oracles we implement will be Zoracles (stay tuned for more information on the partnership).

Furthermore, the ecosystem employs a treasury and a reserve as mechanisms for internal balancing and is controlled by a DAO, which will progressively shift control from the DAO council to all its members. The DEUS DAO council is currently being expanded and is composed of experts in such fields as crypto-economics, finance or mathematics.

The DAO

The DEUS DAO is focussed on two things. First of all, financing the development and operational expenses needed to create, secure, and maintain the DEUS ecosystem.

Secondly, supporting a functional governance structure that directs the development, as well as controls and improves the DEUS ecosystem. For major decisions, the DAO proposes/votes the best course of action, incentivises external service providers to assist in the execution, and verifies their contribution.

The Token

The DEUS token is a part of the DEUS ecosystem and the DEUS swap will be a fully-functional exchange for DEUS tokens. The price of DEUS in the exchange is determined algorithmically, by the amount of ETH locked in the DEUS treasury. Its open-source smart contracts mint DEUS in exchange for ETH — and burn them again upon return.

The DEUS token is transferable on Ethereum, hence, providing liquidity on various other decentralized exchanges is possible if the community decides so it could add DEUS to for example Uniswap.

The static phase is designed to serve as a thank-you bonus to the early supporters and allow new buyers to evaluate the project further without the immediate pressure of rising prices.

It is also a protective feature in early phases market manipulation is not possible due to the static & transition phase, the treasury can get filled with ETH before anyone can speculate on prices.

Trade 500+ Registrars

DEUS Finance is an infrastructure protocol that enables third parties to build financial instruments, trading any asset that can be verified by an oracle. A tokenized asset is referred to as a Registrar. An example of a third-party building on DEUS is dSynths, a synthetic stock, and cryptocurrency trading exchange. The project is now live on Fantom, providing exposure to a brand new market for FTM users.

Along with DEUS’s Fantom launch comes an upgrade to our Registrar AMM (v2). The upgrade includes the incorporation of DEI (our stablecoin) and the minting/burning thereof, allowing uncapped liquidity for traders to tap into. We have also reworked the Event system so that a user’s PNL can be tracked over time, improving UX. Anyone can partner with DEUS in a truly permissionless manner, with protocols able to implement their own trading fee system. With the partner program, a base fee is allocated to the DEUS DAO with the remainder taken by the partner and distributed as they see fit.

dSynths

dSynths is a synthetic asset trading exchange, where users have access to over 500 assets consisting of stocks, commodities, forex, and cryptocurrencies. It is the first protocol to build on DEUS infrastructure utilizing our initial version of the Registrar AMM across multiple chains. With no barriers to entry, no KYC, and no accounts, users have access to a market that is unavailable to many market participants.

High-APY DEUS yield farms on Fantom

DEUS has launched its farms on an array of different platforms within the Fantom ecosystem. Our pools and farms on these platforms have been successful in attracting a large number of users and liquidity into the DEUS ecosystem. Additionally, our pools have amassed a significant quantity of voting rights/bribes on these DEXs and farming protocols.

Solidex, Liquid Driver, 0xDAO, Tarot, and Beethoven-x are some of the more popular farming platforms that support $DEUS and $DEI. When farming on these platforms, users can earn rewards from the DEUS ecosystem in addition to the native ecosystem tokens of these farming platforms. All of the farms featured in this article have dynamic APYs that are determined by their TVL.

Acquiring LP tokens for the yield farms

When allocating to the DEUS yield farms, you must acquire LP tokens from either Solidly or SpiritSwap beforehand. Depending on which farm you wish to allocate your LP tokens to, you must acquire your LP tokens from the correct DEX that outputs LP tokens which are compatible with your preferred farming platform.

DEUS Finance FAQ

How are protocol decisions made?

DEUS Finance is a DAO. All project and protocol decisions are voted on by the community, via snapshot votes. These decisions can include listing additional assets, making changes to token names, symbols, and tokenomics, and more.

What is the token utility of the new $DEUS token (legacy $DEA)?

As of now, the $DEUS token utility is embedded in the $DEI stablecoin and as a means of governance. Buying $DEI will burn $DEUS and selling $DEI will mint $DEUS. This system will create deflationary forces for the $DEUS token, as the demand for $DEI scales. In the near future, as DEUS Finance is positioning itself as a decentralized clearinghouse and derivatives sandbox, all financial services built on top of the DEUS protocol will have a similar mechanic beneficial to the $DEUS token.

What are the downside risks associated with the $DEI stablefarm?

Stablefarms have zero impermanent loss, therefore the farm doesn’t have any direct downside risks against the US dollar.

What is the reward from the yield farms?

Both pools reward users in $DEUS tokens

• $DEI / stablecoin (changes depending on the chain) = 50% APY.

• $DEUS / $DEI = 100% APY (2x multiplier of the stable pools).

What can I use $DEI for?

In its purest form, $DEI is a stablecoin. The power of $DEI is its cross-chain nature, and its ability to bridge liquidity across said chains as opposed to other ‘cross-chain’ tokens with sharded states and liquidity. As a developer, your worries in regards to liquidity and bridging are completely off-set if you were to integrate DEI into your project.

As a user, you can bridge funds to chains where DEI is deployed without having to use a centralized/third-party bridge, via our unified bridge. Even more so, with the upcoming DEUS V3, $DEI will be the main source of liquidity for all synthetic trading (our ‘synchronizer engine’). Using Contractors like dSynths, you will be able to buy synthetics on any (supported) chain, without having to convert your chain native tokens to a local stablecoin. $DEI not only ships liquidity but also vastly improves the user experience.

Tracking Deus