Abstract of Plutos Network
Multi-chain synthetic issuance & derivative trading platform. #Solana #Polkadot #BSC
Last updated
Multi-chain synthetic issuance & derivative trading platform. #Solana #Polkadot #BSC
Last updated
Plutos Network is a multi-chain synthetic issuance & derivative trading platform which introduces mining incentives and Staking rewards to users. By integrating Blockchains such as Solana, Polkadot and BSC, enabling on-chain and cross-chain liquidity and trading, Plutos Network is to offer users synthetic issuance and trading services for a wide range of synthetic products which are sustainable, profitable and disruptive to the traditional derivative market.
Plutos Network is a decentralized cross-chain derivative issuance and trading platform which provides infinite liquidity based on the schemes of Staking and Minting and leading Blockchains like Solana, Polkadot and BSC. With Plutos, all users can have access to synthetic assets from both traditional financial market and the crypto market. By enabling cross-chain and on-chain functionalities, Plutos will be able to deliver keynote features such as scalability, high interoperability, low cost of transactions, offering the perfect solution for current DeFi derivative market to difficulties and limitations such as high gas fee, low transaction speed, vulnerability of hacking such as flash loan etc.
I. Key components of Plutos Network
Plutos Staking
Users can earn rewards by Staking derivative assets on Plutos Network. The Staking service will be first built on Ethereum, and then migrate to Polkadot after the sub-parachain, OCW components are ready for deployment. The Staking service will soon be available on other leading Blockchains such as BSC and Solana.
Plutos Market
Your One-stop platform for issuing and trading crypto derivatives. By applying AMM mechanism and enabling cross-chain wrapping function to build chain-bridges between mainstream assets of Blockchains including Ethereum, Polkadot, BSC and Solana, Plutos Market will be the marketplace when users can trade cross-chain derivatives with low cost, fast transaction and high security. In Plutos Market, users can trade derivatives such as contracts, options, swaps etc.
Plutos Pool
Through PLUT Staking and minting, integrating liquidity from leading DEXes such as Uniswap, 1inch, Balancer, PancakeSwap etc, Plutos Pool can offer infinite liquidity for users with the best trading experience and passive income. With Plutos Pool, slippage and will very much improved thanks to the liquidity integration and cross-chain liquidity pools. There will be no need for Liquidity Provider on Plutos Network. Users will only need to stake PLUT and mint assets such as pUSD to convert one asset to another or open long or short positions of leveraged contracts underlying various assets without any restriction.
II. Technical Architecture of Plutos Network
Sub-parachain Component
A Sub-parachain will be built to be the underlying module for communications with parachains on Polkadot. Thanks to the outstanding features of Plutos Sub-parachain, Plutos will enable fast communications through the module with various parachains such as Rococo etc. The component will be a valuable improvement in order to realize interoperability, scalability and fast transactions.
Plutos Marketplace for Derivative Issuance and Trading
The workflow of derivative issuance and trading on Plutos Network include several key components: Plutos Market for synthetic issuance and trading marketplace, Plutos Multi-chain Asset Collateral Pool for aggregating all assets on Plutos Network, Integration with leading liquidity and swap protocols including Uniswap, 1inch, Pancake and more for infinite liquidity.
Plutos Market is a synthetic/derivative DEX without an order book. The dApp provides both leveraged and un-leveraged products. Users are able to converting one PLUT to another without worrying about how deep the liquidity nor slippage because the debt pool smart contract is backed by the staked collateral which plays the role of liquidity provider. Users are also able to be benefited by taking short or long positions with leverage.
Technical components include:
Interoperability Layer
Plutos supports the decentralized multi-asset collateral and the issuance of synthetic assets based on multiple assets. By using Substrate and Polkadot under-layer technologies, Plutos Network will become a full-scale solution to limitations of interoperability for derivative platforms. In order to improve the user experience and increase the user adoption, Plutos will also integrate BSC and Solana to accelerate the security, scalability and flexibility.
Decentralized Multi-asset Collateral Pool
Plutos supports the multi-asset collateral service in a permission-less and decentralized manner. Users can deposit the supported assets such as ETH and DAI to issue the synthetic assets such as bonds and earn the most high interests on deposits & borrowed assets. Plutos also offers the lowest Collateral Ratio (C-ratio), thanks to the DAO Governance mode, full-scale security measures.
Derivative Issuance and Trading
Plutos supports the issuance, trading and management of synthetic assets with the collateral of supported assets. Users can issue the customized derivative assets such as bonds to trade or raise funds in a decentralized way. User Dashboard will be launched after completion, where users can take a look at the records of their tradings.
III. Infinite Liquidity & Synthetic variety by Staking & Minting
Plutos Pool is a pool created in the process of PLUT holders staking PLUT and minting assets including pUSD, pBTC, pETH etc. The pool acts as a liquidity provider, acting as the counter-party when trading pUSD to pBTC, for example. Therefore, it can be said that the liquidity is infinite. In other words, there is no worry for users over the lack of liquidity or slippage existing in traditional financial markets.
However, if all users only have pBTC and the BTC price rises by 50%, the total debt also increases by 50%. In this case, the collateral pool, the staking pool has the opposite position, pBTC sell (or inverse piBTC), so the buy/sell ratio plays an important role in the overall collateral ratio of the system. Plutos Network will increase the stability of the system by reducing the risk of various methods such as position hedge in the on/off chain for the position imbalance of the system.
Product variety can be maximized by virtue of the Pool design:
Under such framework, the use cases are expanded largely, including but not limited to the following:
Natural hedging.
The borrower does not need to bear risks of foreign exchange rates. For Bitcoin miners in Europe, their costs and fixed asset investment are denominated in euros, so the US dollar stable currency is very tasteless for them. Now, European miners can hedge against foreign exchange risks by collateralizing Bitcoin or Ethereum and lending EUX. This also applies to traders who settle profits in euros.
Short/long positions.
Multi-currency stablecoins provide convenience for traders to invest in the foreign exchange market. For example, when a trader is bearish on the U.S. dollar and bullish on the euro, he can lend the U.S. dollar and exchange it for the euro.
Low-friction global carry trading.
For depositors in the euro zone with negative interest rates, although the liquidity mining benefits of USD stablecoins are attractive, the frictional costs of carrying out carry trades are still high. The transaction party needs to first convert the euro into USDC or USDT, which will bring additional transaction costs and foreign exchange risks. The EUX currency pair will effectively reduce friction costs and provide convenience for Euro holders to participate in liquidity mining and use other DeFi protocols.
The global interest rate market.
Since market supply and demand is a dynamic adjustment process, the interest rates of USX and EUX will also change accordingly, thus creating an active global interest rate market.
The global foreign exchange market.
As the demand for multi-currency stablecoins increases, liquid currency pairs (scale, trading currency pairs) will gradually increase, and eventually a multi-currency global foreign exchange market will be formed.
IV. Plutos AMM Structure for Trading Synthetics
Plutos Network applies pAMM mechanism during the trading of products such as options, swaps, contracts etc.
After users place collaterals in assets supported in the Plutos Network, for example, pETH, pUSD etc, the users can trade the synthetic products provided, without any worries about latency or big slippage.
The traditional order book is replaced by liquidity pools that are pre-funded on-chain for both assets of the trading pair. The liquidity is provided by other users who also earn passive income on their deposit through trading fees based on the percentage of the liquidity pool that they provide.
V. Plutos Market: how does synthetics trading work
Plutos Market offers better trading experience including reducing of friction, slippage, expanding the accessibility of mainstream crypto assets, etc.
The lack of an order book in Plutos Market offers better deals when people trade synthetic assets. Assets will be assigned with real-time pricing through on-chain and off-chain pricing feeding by oracles such as ChainLink and Umbrella, then these assets are easily converted. Due to the large size of collaterals placed in Plutos Market, it can avoid issues such as slippage by enabling infinite liquidity and on-chain trading process.
VI. System Architecture
PLUT Mint - Collaterals
Holders of PLUT can mint assets such as pUSD, pETH, pBTC by placing collaterals and using Plutos smart contracts. There will be a Collateral Ratio required to be below 500%. After collateral placing, the debts will mint and be stored in pUSD.
If PLUT price rises, this Collateral Ratio (C-Ratio) also fluctuates. When the price of PLUT rises, the increased value of the PLUT tokens can be used to generate additional pUSD, which can be exchanged to additional synthetic assets, vice versa. Users who maintain collateral ratio above this optimal C-Ratio can claim the exchange fee reward and inflation reward according to the staking proportion.
The collateral ratio (C-ratio) is simply the ratio of the value of users; locked collaterals to the value of their current minted tokens.
Certain amount of Collaterals is required to always maintain a C-ratio above the pAsset's minimum requirements, otherwise the protocol will initiate a margin call to liquidate collateral in an attempt to restore the position's C-ratio. The protocol will be able to determine whether a position is underneath the required threshold by re-denominating all pAsset values into assets like ETH, BTC, USDT etc via oracle price feedings.
Should the pAsset's minimum C-ratio be . Given the current quantities of collateral and minted pAssets and their current prices , the effective collateral ratio at any time is:
In parallel to the depositing and withdrawal collateral, the user can also mint and burn pAssets to adjust the value of their collateral's effective C-ratio. In this case, the collateral ratio is:
Plutos Market - Exchange
Plutos Market offers users a way of trading a large variety of synthetic assets without having an underlying asset. Users have the opportunity to easily and comfortably move their asset from one to another to make profits without going through any procedures or censorship mandatorily enforced in traditional financial systems.
There will be no counter-party needed during the trading as the system automatically convert debts into synthetic assets. When a user wants to exit or reduce their debts, they will have to pay for the debts as they must burn the identical amount of debits to unlock.
Take Plutos Market's AMM in Balancer as an example:
Due to the separation of token management and accounting between AMM and the vault, the fund pool can implement any arbitrary and customizable AMM logic, including weighted pools (for constant weight index funds), stable pools (for soft pegs) Tokens) and smart pools (for ongoing parameter changes).
With the launch of the Balancer Asset Manager (a trusted external smart contract that can use the base tokens stored in the vault in the fund pool), by lending unused assets in AMM to the lending agreement, capital efficiency and yield can be improved.
