Focusing on RWA, the DEX Ostium recently launched a points system to attract many players to trade or deposit into liquidity pools for returns, with transaction fee income reaching $1.6 million in April. Users interested in traditional finance might also utilize this platform without the need to withdraw funds to the real world, using stablecoins for hedging, perhaps in the recently repeatedly rising gold? Or perhaps hedging currencies like the Euro or Yen?
What is Ostium?
Ostium is a trading platform based on Ethereum L2, focusing on bringing physical assets onto the chain for trading, including major indices, commodities, foreign exchange, etc., providing transparent and non-custodial trading services with leverage of up to 200 times. Investors and partners include GSR, Coinbase, Alchemy, and TWO SIGMA.
According to Dune's data, Ostium has accumulated a trading volume of $5.74 billion, with 7,050 users and total trading fees reaching $2.29 million.
In terms of trading volume, besides Bitcoin and Ethereum taking the first and second positions, the Euro and Japanese Yen also have good trading volumes, accounting for 12% and 11%, respectively. Additionally, Gold and the S&P 500 index also have trading volumes around 10%, indicating that many traders use this trading platform to engage in traditional financial products.
Ostium's shared liquidity layer design
Ostium does not adopt a traditional central limit order book but instead uses a so-called Shared Liquidity Layer (SLL) for support. The so-called SSL is composed of a liquidity buffer and a market-making vault to reduce the situation where liquidity providers directly provide liquidity to traders.
Because the main feature of its model introduces traditional financial quotes, with the liquidity buffer pool serving as a counterparty, and when the buffer pool cannot provide liquidity, the market-making vault extends the liquidity. In return, the market-making vault can earn liquidation rewards and trading fees. Users wishing to participate as liquidity providers can only deposit and withdraw funds through the market-making vault, avoiding the liquidity disruption caused by fund inflows and outflows.
Is there no risk when trading against users?
Due to the Ostium system using a single reference price for each trading asset, with prices derived from real-world oracle prices. This is equivalent to trading against users; when users make substantial profits, it may cause losses to the liquidity buffer pool.
Ostium's research report issued last year pointed out that because each trading pair on the platform is priced in USD, through diversified asset portfolios and long-short combinations, bringing all trades into the same liquidity buffer can have a risk diversification effect.
The report emphasized the benefits of integrating real-world assets. It provided a new perspective on quantifying and managing risks within these complex systems through developing imbalance scores. Simulations and data analyses in the report indicated that incorporating risk-weighted assets could significantly reduce risks, lowering the average and variance of imbalance scores, and highlighting the value of synthetic risk-weighted assets in diversifying and stabilizing AMM portfolios.
Liquidity providers deposit their capital into the market-making vault to mint OLP tokens, representing their share in the vault. Additionally, they earn trading fee rewards for bearing potential delta risk, with the current annualized return rate at 9.9%. The collateralization ratio is observed to be 98.73%, below 100%, indicating that LP providers still bear risks associated with trading against users.
TALKCHAIN introduces how to earn airdrop points
The on-chain analysis team TALKCHAIN recently introduced ways to earn points in a video, suggesting that everyone exchange trades for points instead of risking being an LP provider, which may also provide opportunities to receive some airdrops. Users interested in traditional finance might also utilize this platform without the need to withdraw funds to the real world, using stablecoins for hedging, perhaps in the recently rising gold? Or perhaps hedging currencies like the Euro or Yen?
This article on the RWA on-chain platform Ostium, which utilizes stablecoins for hedging real-world assets while earning airdrops, first appeared on Chain News ABMedia.
