SOFA.org Empowers Users to Trade Freely: ‘Trade What You Want, With Whoever You Want’
HONG KONG, June 10, 2024 /PRNewswire/ — The world of decentralized finance (DeFi) is an essential part of the cryptocurrency industry, offering innovative financial solutions outside traditional banking systems. However, as the industry evolves, DeFi mechanisms are growing more and more intricate. This complexity presents challenges not only for newcomers but also for seasoned enthusiasts, often referred to as “DeFi Degens,” who require significant time to grasp the sophisticated operations.
In simpler terms, if early DeFi could be likened to a basic Lego set for children, today’s DeFi is more akin to a Technic Lego set with thousands of intricate pieces. Innovating within DeFi to reduce this complexity and make it more accessible has become a pressing need.
To address this issue, various DeFi protocols, investment institutions, middleware providers, and blockchain builders have come together to form SOFA.org, a decentralized non-profit organization. SOFA.org is dedicated to promoting the highest standards in DeFi, supporting high-quality projects, and advocating for the mainstream adoption of blockchain technology in finance. Its founding members include notable names like Galaxy Asia Trading Ltd, OKX Wallet, Coincall, HashKey Capital, SignalPlus, and Chainlink, amongst others.
SOFA.org’s Grand Vision for an On-Chain Clearing Ecosystem
Clearing is one of the most critical elements in DeFi derivatives trading, ensuring system stability and protecting the interests of all participants. Today’s DeFi derivatives are diverse and intricate, involving various assets and complex trading logic. In the decentralized world, clearing is achieved through smart contracts and decentralized protocols, enabling automated processes with minimal trust required. This real-time clearing ensures the safety of participants’ funds and maintains the integrity of transactions.
SOFA.org aims to tackle the complexities of on-chain derivatives with a short-term goal of creating a comprehensive clearing and settlement ecosystem. Essentially, SOFA.org aspires to be the “Android” of DeFi, enabling various DeFi protocols to clear different financial derivatives on its platform. Just like mobile apps installed on different phones, these derivatives positions can operate seamlessly across various protocols. By joining SOFA.org, protocols will achieve underlying interoperability, enabling them to clear each other’s derivatives positions. This will pave the way for even more complex and sophisticated on-chain financial products.
Introducing SOFA Protocols
SOFA.org is unveiling a set of structured products known as SOFA Protocols. This innovative protocol aggregates multiple DeFi product functions, creating a hybrid derivatives protocol. The initial launch will take place on Ethereum and Arbitrum, with future expansions planned for Linea, X Layer, and other EVM-compatible chains.
The SOFA Protocols offer a new way to handle crypto by making transactions clear and safe. It lets users benefit from the best products without worrying about who they are trading with, or where their money is being held. All details are recorded transparently on the blockchain, supporting a wide array of products. Tokenized positions improve capital efficiency and can be pledged across DeFi and centralized platforms as assets. Using ERC-1155 tokens saves on costs, and the system is designed to be sustainable and user-friendly.
As SOFA’s inaugural proof-of-concept, they will initially focus on three popular product structures called Rangebound, Bull Trend, and Bear Trend. All of these products are available in either ‘Earn’ or ‘Surge’ formats. Moreover, additional product types will be continually added based on user demand and ecosystem feedback.
SOFA Work Flow Overview
The volatile nature of crypto asset prices often sees them moving upward, downward, or sideways. The SOFA Protocols recognize these patterns, and have productized them into Bull Trend, Bear Trend, and Rangebound structures, and available under ‘Earn’ and ‘Surge’ formats to cater to different risk preferences.
Earn is designed for users seeking stability and capital preservation. It involves depositing initial funds into established yield protocols such as Compound or AAVE to generate basic interest. This process is meticulously reviewed, with governance token holders voting on the protocol choice. If market conditions align with specific criteria, additional profits may be provided.
Earn aims to minimize risk, ensuring the safety of the initial deposit, providing stable returns, and offering the potential for extra profit without risking the principal. While the potential returns are lower compared to high-risk products, and profits are capped in highly volatile markets, it remains a reliable option.
For example, if a user opts for a Rangebound structured product with an annual yield of 4% in Earn and predicts that ETH will fluctuate between $3500 and $3900 by June 28th, they will earn an excess return if ETH stays within this range at maturity. If ETH moves outside this range, they will still earn a 4% annual yield.
Surge aims to maximize potential returns by speculating on high-risk strategies. This product involves predicting a specific price range for crypto assets at a particular time. If the price falls within the predicted range, users receive high returns. However, if the prediction is incorrect, the user would lose the initial deposit.
For example, if a user predicts that Bitcoin‘s price will be between $71,250 and $74,000 on June 11th and purchases $20 worth of tickets, the potential return could be $60.28. Conversely, the maximum loss would be $20.
SOFA Protocols’ products resemble a combination of various DeFi protocol offerings. The innovation of SOFA Protocols lies in its integration of the strengths of multiple protocols, providing a more intuitive user interface and user-friendly interactive products. This approach is particularly beneficial for new entrants and those unwilling to delve deeply into the complexities of DeFi.
SOFA Protocols aims to enhance the user experience and offer a rich set of financial tools to the market. By doing so, it promotes the further development of the DeFi ecosystem, making it accessible and beneficial for a broader range of users.
Tokenomics: The Curve War
In terms of the economic model, SOFA.org employs a dual-token model similar to many GameFi projects, incorporating unique game theory mechanisms. The dual-token system includes the utility token RCH and the governance token SOFA.
RCH Token: The total supply is 37 million. Before the official launch, 67.6% (25 million RCH) will be placed in a Uniswap liquidity pool with at least 700 ETH (approximately $2.7 million) to establish initial price and liquidity. The corresponding Uniswap LP tokens will be destroyed, permanently locking this part of the liquidity in Uniswap.
The remaining 32.3% of RCH tokens will be unlocked according to a fixed schedule. Post-launch, 12,500 RCH will be unlocked daily, decreasing by 20% every 180 days until all tokens are distributed. This allocation method ensures a gradual release, avoiding market volatility.
Initially, the daily output of RCH is only 0.05% of the circulating supply, having minimal impact on the market. Simultaneously, all revenue within the SOFA.org ecosystem will be used to buy and burn RCH on Uniswap, further enhancing its scarcity and value.
SOFA Token: Expected to launch six months after the project goes live. SOFA tokens grant holders voting rights to directly participate in ecosystem decisions. As a decentralized, non-profit, open-source technology organization, all decisions of SOFA.org will be determined by SOFA token holders’ votes.
Early founding members, developers, ecosystem advisors, active community members, early RCH AMM liquidity contributors, and CeFi and DeFi protocols supporting SOFA protocol position tokens will have opportunities to obtain SOFA tokens.
The economic value of SOFA tokens is directly linked to their governance function. Holders can vote on the introduction of new financial products, the allocation ratio of RCH among introduced products, and the distribution ratio among protocols within the ecosystem. The inclusion of new collateral and partners also requires SOFA holders’ approval.
As SOFA.org’s popularity increases, a positive flywheel effect between RCH and SOFA will ignite the market. Increased usage of SOFA.org will result in fees being used entirely to buy and burn RCH. However, RCH’s daily output is fixed, further increasing its scarcity and market value.
As RCH prices rise, some users will intensify their use of SOFA.org ecosystem projects to obtain more RCH, while others will buy SOFA tokens to influence RCH’s distribution. Some SOFA.org ecosystem projects may even bribe SOFA holders for higher RCH allocation ratios, boosting project usage.
It seems like a new Curve War is on the horizon.
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SOURCE SOFA.org
