Octopus Protocol

2023-01-26 05:14:07 • 118 Views

About Octopus Protocol

Octopus is an open protocol to create, exchange, settle, and manage synthetic assets. The protocol enables the issuance of synthetic tokens and
their exchange through decentralized derivatives. Octopus Protocol leverages innovative technological solutions like blockchain and smart contracts to
facilitate a platform for engagement with decentralized derivatives. Through a trustless architecture, Octopus seeks to offer unparalleled access and
exposure to real-world assets.

Features

1. Unparalleled Access to Real-World Assets
With traditional financial derivatives, trusting the counterparty to hold its end of the agreement remains one of the biggest challenges. Hence, financial derivatives are only accessible to institutional investors relying on costly legal processes and trusted third-party intermediaries.

Decentralized Finance allows any individual, DAO, or party to have equal access to financial tools without centralized control or third-party intermediaries. The Octopus Protocol uses the innovation of DeFi to offer unparalleled access and exposure to real-world assets in an equally accessible financial ecosystem.

2.Minimal Usage of Oracles
Oracles help in accessing outside data, like price feeds, for synthetic assets. They are programmed to fetch rates from reputable sources and report them to smart contracts. Hence, the price of on-chain synthetic assets is pegged to the price of real-world assets supplied by oracles.

However, current oracle solutions are vulnerable in their design, i.e., they are susceptible to corruption. If the oracle is compromised, it can result in the manipulation of the smart contract. To minimize the loophole of corruption within the oracles, Octopus Protocol is designed to minimize the usage of oracles. By providing off-chain data for blockchain transactions in an incentivized environment, Octopus reduces the reliance on oracles and increases security within its ecosystem.

3. Unparalleled access to real-world assets
Octopus allows users to create a basket of tokens to diversify cryptocurrency investment portfolios and minimize financial risks. The basket is represented by a synthetic asset that calculates the overall price of all the instruments. Moreover, the basket of assets is not limited to cryptocurrencies. It can include several investment fiat currencies, commodities, digital assets, bonds.

The Protocol allows any participant to access financial contracts or derivatives from any part of the world through synthetic tokens. For instance, an entity from a developing nation can access Australian stocks through minting synthetic tokens representing the underlying asset, i.e., Australian stock. The price difference of the stock can be tracked through an oracle, and the contractual agreement is controlled by a smart contract.

4. Customized Derivative Contracts
Traditional financial derivative contracts offer limited access to a handful of individuals and institutions. Octopus Protocol allows exposure to any kind of financial derivatives without any restrictions on geographical boundaries and limitations of the current financial ecosystem.

Customized financial contracts have never been available to individuals as the costs for doing so have been restraining. However, Octopus Protocol facilitates contracts that fit personal circumstances along with preferred investment instruments.

5. Non-Custodial
Tokenization refers to the representation of a real-world asset on the blockchain in the form of digital tokens. Synthetic tokens provide accessibility and leverage to the asset without going through the tedious process of owning the asset. They are also more affordable to hold as compared to real-world asset-backed tokens. Synthetic tokens also provide censorship resistance (non-custodial) which asset-backed tokens cannot offer due to custodian restrictions.

6. Governance
Octopus Protocol is governed by anyone who owns $OPS tokens, Octopus’s native currency, in a fair and transparent way. All OPS token holders can propose a change to the protocol or vote on existing proposals.

Therefore, the role of OPS tokens includes acting as an incentive for liquidity providers and being a governance vehicle for the decentralized infrastructure.

7. Trustless Architecture
The current infrastructure for financial derivative contracts requires intermediaries that govern, manage, and enable trust between two entities. These standards of engaging with derivatives are expensive, time-consuming, and require resources. The trust-based contracts also restrict access to derivative contracts in a traditional financial infrastructure.

Octopus Protocol leverages the innovation of blockchain and automated smart contracts to remove the factor of dependency on third-party intermediaries. Instead, all operations are managed by a pre-programmed network of smart contracts, which are automatically executable. Octopus is a DeFi protocol powered by smart contracts; its inherent infrastructure eliminates trust barriers for trade and settlement of derivatives.

8. Affordable Solution
Modern DeFi derivative solutions restrict innovation by demanding a higher deposit for collateral in exchange for the issuance of tokens. Octopus provides an affordable solution to mint tailored synthetic assets by reducing the requirement for a high (amount) of collateral.

Technical Info

Following are the 4 products offered by Octopus Protocol -

1. Decentralized Derivatives Exchange
Decentralized derivatives built on blockchain carry applications in the financial ecosystem. Synthetic derivatives provide benefits of hedging, thereby allowing users to manage risks. The factor of hedging allows a user to offset a potential loss by fixing a predictable amount that would be paid for the pre-defined price of any asset within a specified duration of time.

Octopus provides an architecture for secure and automated exchange of decentralized derivatives in a trustless environment. It facilitates a permissionless way to exchange and settle derivatives without any third-party intermediaries or centralized entity governing operations.

Trade Derivatives
The decentralized exchange or DEX allows trading of derivatives facilitating unlimited exposure to several instruments, including stocks, bonds, equities,
digital assets, futures, and more. Users can trade derivatives with tight trading spreads, low margin requirements, and innovative hedge instruments
that do not liquidate assets prior to settlement.

Non-Custodial Wallet
Octopus holds users’ funds in a non-custodial manner. In other words, a user remains in complete control over their digital assets. You can also track your
trading history and cryptocurrency trading portfolio from your wallet.

Minimal Collateral
The Octopus ecosystem offers affordable solutions to create synthetic assets. Moreover, it provides institutional-grade services for the issuance
of synthetic assets by depositing a minimum amount for collateral.

Trustless Architecture
Exchange derivatives on an infrastructure that offers best-class features of a centralized exchange but on a decentralized and peer-to-peer architecture.

Minimal Trading Fees
Access the deep liquidity of Octopus Exchange at minimal trading fees and competitive processing charges.

Staking
Gain rewards and annual returns as high as 220% by participating in the Octopus network. Earn its native token, OPS, by engaging in the staking
mechanism available on the Octopus platform.

2. Decentralized Asset Management
Decentralized asset management facilitates a transparent and open way of settling synthetic assets by connecting investors to asset managers. Users can view the entire history and performance of an asset manager before investing their funds into pools.

Transparency
Octopus connects investors to asset managers in a transparent way on peer-to-peer infrastructure.

Tested-Tools
Get first-hand access to tools to create, rebalance, and manage your crypto portfolio.

Diversify
Access Octopus to diversify your trading portfolio comprising several instruments, including traditional financial tools like stocks, bonds, and
indices as well as digital assets.

Track History
View the complete history of asset managers before choosing to invest your funds into their baskets.

Binance Smart Chain (BSC)
To enhance scalability, Octopus Protocol uses the Binance Smart Chain (BSC) blockchain network to create and manage synthetic assets.

3. Social Trading
Social trading allows novice traders to get first-hand access to trades executed by expert investors. It will enable beginners to the leading expertise and insights of experienced traders. Social trading allows users to follow the same trades of their preferred trader.

Gather Leads
The social trading feature facilitates users to gather expert insights and leads from experienced traders.

Expert Trades
A user can follow the trading patterns, strategies, and trades of their preferred trader.

Tool for Beginners
Novice traders, can use social trading and access the best trading experience by following the trading patterns of expert traders in the industry.

Security
The trading experience of Octopus offers an intuitive, low-cost, and secure method of setting your account and accessing social trading features.

Strategies
Octopus Protocol offers complete transparency on the performance of collective strategies, how they are set up and operated.

4. Options Trading
Options trading, a type of derivative, offers an investor the right but not obligation to buy or sell an underlying asset at a predetermined price at the set expiration date. With Options trading, individuals or entities can tokenize any asset such as stocks, equities, or bonds into synthetic tokens and gain exposure to financial gains of such instruments.

Crypto options offer a relatively low-cost and low-risk solution for trading any asset as compared to trading futures. This instrument allows traders to hedge or speculate the future price of an underlying asset.

Hedging
Options trading allows an investor to seek financial gains and minimize the price risk of any asset against a change in market conditions.

Competitive Market Fees
Settle options contracts on Octopus with best-class services, including a competitive rate for settlement fees, which is a small portion of the underlying asset value.

Swap Synthetic Assets
The decentralized environment of Octopus, ensures no restrictions on trading pairs. Any synthetic asset can be swapped for another without any limitations.

Minimal Requirements
It is a decentralized exchange or DEX platform. It is permissionless and hence does not require the user to provide several documents during the sign-up process.