Bouncebit aims to build a hybrid platform that combines high yields and derivatives trading in the cryptocurrency market. The project's highlight is leveraging the liquidity depth of centralized exchanges (CEX) and the transparency of decentralized protocols (DeFi), to bring sophisticated derivative products from traditional finance (TradFi) into the blockchain world while maintaining a trustless settlement mechanism.

Protocol Stack

  1. Hybrid Liquidity Layer

    • Combining on-chain AMM liquidity with order book depth on CEX.

    • Helps reduce slippage and increase capital efficiency.

  2. Structured Products Engine

    • Allows the implementation of strategies such as covered call, cash-secured put, and high-yield products with stablecoins.

  3. Settlement Contracts

    • Ensures contract execution occurs on-chain.

    • Settlement prices are sourced from multiple sources through oracles to reduce data discrepancy risks.

  4. Risk Management Module

    • Automated risk hedging and portfolio rebalancing for complex strategies.

Current Applications

  • BTC and ETH yield vault: Providing a covered call strategy to increase APY for investors.

  • Safe stablecoin strategy: Protecting principal, suitable for risk-averse investors.

  • Institutional support: Helping organizations participate in OTC derivatives trading with on-chain settlement mechanisms.

BB Token Model

  • Governance: Voting on new products, risk parameters, and liquidity incentive policies.

  • Fee Distribution: BB holders receive revenue shares from vault management fees.

  • Insurance staking: BB stakers help insure risks for the protocol and earn rewards from liquidations.

Why is Bouncebit important?

In the post-CeFi crisis context, the demand for safe and transparent yields is rising sharply. Bouncebit offers:

  • A safer solution compared to shady lending desks.

  • Combining the advantages of CEX (deep liquidity) and DeFi (transparency, trustless).

  • Optimizing capital efficiency and reducing slippage in derivatives trading.

Risks and Challenges

  1. Legal barriers: Derivatives are heavily regulated in many countries.

  2. Oracle reliability: Price data discrepancies or manipulation can affect trading outcomes.

  3. Fragmented liquidity: Balancing between CEX and DEX liquidity sources is a challenging problem.

Bouncebit is positioning itself as a bridge between the traditional derivatives market and DeFi, providing both individual and institutional investors with a high-yield – controlled-risk – deep liquidity – on-chain transparent platform. If successful, the project could become one of the new pillars of the derivatives space in cryptocurrency.