Quick Overview: Drift Protocol | Everything you need to know about it.

March 24, 2022 - Around 4 mins mins to read

Drift Protocol is the first perpetual swap exchange to leverage DAMM. Drift’s DAMM is based on a virtual AMM (vAMM) but differs in that it has a new mechanism that automatically adjusts to recalibrate liquidity in the trading pool based on participant demand and open interest.

Overview: Drift Protocol

Drift protocol is an on-chain decentralized futures exchange based on Dynamic AMM built on Solana. Drift products currently offered to traders include:

Speculate on an asset class with a position that supports x5 leverage.
Get profit from collecting funding rate fees.

In addition, features are currently under research and development and soon to be released such as:

Create synthetic spot positions.
Create delta-hedged stablecoin position.
Hedging for the risks of temporary loss (Impermanent Loss) of positions providing liquidity.

Features

Drift’s Dynamic AMM

Drift Protocol is the first futures exchange to launch Dynamic Automated Market Maker (DAMM). This mechanism is based on the traditional vAMM or AMM mechanisms but is more prominent in the points of price anchoring and the parameter k can be customized in the formula (in conventional AMMs: k is a constant constant. ).

Thereby, Drift Protocol can adjust the amount of liquidity in pools and adjust to the needs of the participants. Since then, Drift brings about better capital efficiency thanks to the flexibility of this DAMM mechanism and overcomes the weakness of high slippage.

In addition, with the DAMM mechanism, traders can trade cross-margin long or short with positions using 5x leverage but only with low slippage.

Insurance Fund

Drift Protocol owns an insurance fund to protect against risks, such as protocol failure or unfulfilled positions. The protocol adopted this gives great confidence to the traders.

The Fund will receive part of the collateral from the successful liquidation and part from the transaction fees so that it can automatically perform case tasks such as paying for losses at any level that the user protocol has to bear.

Funding Rates

When doing leverage trading, surely Funding rate is a concept you need to pay attention to. Funding rate in the futures market or margin is simply a “hold fee” determined by the rate of regular payments between borrowers and lenders after a fixed period, per hour on Drift.

If the Funding rate is positive, i.e., the price on the futures market (marked prices on Drift Futures) is higher than the price determined by Oracle, the short position holder (sell side) will have to pay the spread fee back to those who placed the position. Long position (buyer), and vice versa.

Drift Protocol aims at Symmetric Funding Rate (Symmetric Funding Rate) and when an imbalance between long/short positions occurs, Pool Rebate will intervene to pay or collect the difference in proportion to the pool. at an effective level.

On top of that, it avoids the overuse of the aforementioned insurance fund and, in turn, provides security for the protocol.

Roadmap

Q2 2021 – Done

Litepaper
Grant from Solana and Serum
Seed Fundraise

Q3 2021 – Done

Closed Devnet Launch
Devnet Launch

Q4 2021 – Done

Closed Alpha Mainnet Launch
Full Alpha Mainnet Launch

Q1 2022

Trail of Bits Audit – Process
Limit Orders, Stop Losses, and Take Profits – Done

Q2 2022

Cross Collateral
Formulaic Peg/K

Token Metrics

Token Name: Drift Protocol
Ticker: Updating.
Blockchain: Solana.
Token Standard: Updating.
Contract: Updating.
Token Type: Governance.
Total Supply: Updating.
Circulating Supply: Updating.

Token Allocation & Token Release Schedule

Updating.

Team

Updating.

Partners & Investors

Conclusion

Drift Protocol is developing an advanced perpetual futures protocol featuring a virtual AMM.

This project is backed by leading funds and angel investors in the space and is supported by the Solana and Serum Foundation. Drift is built by traders and developers from traditional and crypto-native hedge funds.

Find more information about: Drift Protocol

Website: https://www.drift.trade/

Whitepaper: https://docs.drift.trade

Twitter: https://twitter.com/DriftProtocol

If you have any questions, comments, suggestions, or ideas about the project, please email ventures@coincu.com.

DISCLAIMER: The Information on this website is provided as general market commentary, and does not constitute investment advice. We encourage you to do your own research before investing.

Issac

Coincu Ventures

DeFi