Aug-09 AMA Recap

Q1. What is OpenLeverage and how you came up with the idea of it?

Q1-Answer:

Here’s a screenshot of our market overview panel, here users will see top trading pairs and the lending pools, which is useful.

The mission of OpenLeverage Protocol is to create an entirely permissionless decentralized margin trading infrastructure which means no permission needed to create a margin trading market for any pair.

Compared with CEX, such as Binance only have a hundred of tokens, BitMEX only have 10.

But how many crypto currencies are there? Take an example as Uniswap, there are thousands of tokens already and new tokens get listed every day.

So, is there a place that we can long or short these thousands of cryptocurrencies? Nothing like this ever existed before OpenLeverage.

Sure, you may wondering why wouldn’t CEX adding these crypto pairs for margin trading.

But unfortunately, they are too slow on that, and they have huge obstacles to build adequate trading liquidity for each trading pair.

So, to truly build DeFi’s vision of global financial access, there needs to be a decentralized, permissionless, scalable, secure leverage trading facility that serves the long tail and fast-growing DeFi market. OpenLeverage is built for it.

Q2. Can you introduce a couple of features of OpenLeverage？

Yes! there are couple of unique features. I’d like to look at it from different angles. For DEX: OpenLeverage is a boost to DEX, enhancing volume and liquidity depth, compared with other synthetics or contract based Defi products dragging volume out from DEX and competing against it.

and for Trader: Be able to speculate long or short on fast-growing tokens.

For liquidity miner & market makers, being able to hold a short position is huge help to hedge potential impairment loss.

Lenders will be able to earn high yields with three layers of reward.

1/ interest from borrowing

2/ OLE reward on incentivized pools

3/ staking interest-bearing LToken to other projects’ field farms.

Q3. Can you tell us little about how actually the OpenLeverage works?

First, everyone can create lending pools for a specific pair available on Uniswap.

As an example, someone might be interested in doing leverage trading on the FEI/USDC pair, so they create two lending pools for the FEI/USDC pair of Uniswap. Anyone can create isolated pools for users to lend or borrow for margin trades.

Next, a user can provide liquidity in the FEI → USDC pool, which means providing FEI to be borrowed to buy USDC. Or users can choose to provide liquidity in the USDC → FEI pool instead. Lenders will receive variable interest based on the pool’s utilization. This is like how the Compound protocol works.

Lenders receive LToken of the pool as an interest-bearing token, which can then be re-staked to other yield farms to receive further rewards.

Traders can choose to borrow from either pool to swap to another token as a leveraged position. In this example, the trader borrows USDC by putting down the same amount of USDC as collateral to make a 2X margin trade, swapped into FEI position with the liquidity pools of Uniswap, and locked in the smart contract.

By taking advantage of liquidity on a DEX, we don’t have to create separate liquidity or an order book for leverage trading.

Once the trader closes the position, the protocol swaps the FEI position back to USDC by repaying the loan with interest, which returns the deposit plus or minus any profit or loss back to the trader.

Q4. Can you introduce the investment institution?

OpenLeverage has completed the $1.8 million seed round of funding led by Signum, LD Capital, and FBG, Continue Capital, YBB Foundation, and other institutions.

Q5. What liquidity sources OpenLeverage use?

Well, an important question. At current testnet, we are using UniSwaps’ liquidity, and there will be adding more liquidity sources in the future integration, such as SushiSwap, PancakeSwap, MDEX…

Q6. Can you tell us about the tokenomics of the $OLE token?

I need to highlight that there’s no $OLE token sale yet, and it’s necessary to let the community know that the $OLE also will not be launched with the mainnet and will be separately launched at a later. So, be cautious of the fake coins!

$OLE is the native token that is to be mint by using our protocol, e.g., borrowing, lending, helping liquidating positions, farming.

Our community can stake and lock $OLE to receive time-weighted vote-escrow token $xOLE to vote on governance proposals, sharing protocol’s fees, boosting $OLE earning on lending, and receiving a discount on margin trading.

We believe in the power of community, so we reserved 70% for community mining, the remaining 30% for team & investors in a prolonged vesting schedule.

Full details of the tokenomics will be provided before the OLE launch.

Q7. When will the mainnet go live?

We are currently in the testing phase: https://kovan.openleverage.finance/app

The mainnet launch time will be announced in September. Please join our Discord community: https://discord.gg/JeCwMUR4HN to ensure that you follow the latest notifications. And everyone is welcome to submit your feedback and suggestions in the #feedback channel.

Questions from community

How OpenLeverage enabled Leverage trading on chain?

OpenLeverage is money markets where traders can borrow fund from the lending pools and buy target asset to get leveraged positions.

How will team manage Liquidity?

We don’t. Liquidity should be driven by the communities where they needed, and the dynamic interest model of OpenLeverage is designed to balance between supply and demand of funds.

Any plans to build on layer 2 chains?

OpenLeverage will be deployed to Arbitrum or Optimism as in the roadmap.

What differentiate your platform open leverage over your competitors such as bZx and other existing players in the market?

The essence of Openleverage is leveraged trading. At present, most derivatives in the market, such as dydx\perp, are more of a futures contract, which is a bet on the current price, not a transaction that actually occurs in the market.

Could you please explain how the 2 Phase liquidation works to avoid loan attacks and cascading liquidation events and touching upon that does your protocol run the risks of flash loan attacks?

Our protocol has a way to deal with flash loan attacks, each transaction and liquidation cannot be completed in the same block, so we are not afraid of flash loan attack.

CEX usually have a funding fee which you need to pay till your margin trade is open, its usually every 8 hrs.

0.3% transaction fees, in addition to the fees charged by DEX. Fees and fee allocation can be adjusted through governance to keep the protocol competitive in the market.