A Decentralized Derivatives Protocol with Automated Liquidity Reserves

Table of Contents

Abstract

Strike Protocol (or "Strike") is a decentralized derivatives protocol with automated built-in liquidity reserves. The prices of the derivatives are set automatically by an Automated Market Maker (AMM) which is backed by collateralized SKE tokens (Strike's native ERC-20 tokens, or "SKEs") staked by the SKE token holders.

The advantages of Strike are:

  1. Like Uniswap, traders can trade with AMM Smart Contract directly without the need of counterparties. It solves liquidity issues experienced by most decentralized exchanges (DEXs) and derivative protocols.
  2. SKE token holders can become liquidity providers by staking their tokens on Liquidity Reserves, which back and secure the AMM. SKE token holders ensure the AMM is backed by sufficient collateral to absorb significant price fluctuation and in turn are rewarded with staking rewards and a portion of transaction fees.
  3. Traders can take long or short positions directly with AMM or purchase ERC-20 upTokens/downTokens directly from the Leveraged Token Factory, allowing for interoperability with other Decentralized Finance (DeFi) protocols.
  4. Strike is built on top of Ethereum, fully non-custodial, and inherits the best properties from Ethereum, including being trustless, permissionless and censorship resistant.

Derivative Trading

Guaranteed On-Chain Liquidity

Like Uniswap, Strike automatically sets prices using a Bonding Curve which enables traders to take long or short positions instantly and directly without counterparties.

Please see the Automated Market Maker section below for more details.

Derivative Contracts

Strike currently provides futures contracts with cash settlement and will extend to other derivative contracts like Swap, Options, ..., etc in future releases.

Margin Trading

Margin trading is offered by Strike's Clearing House smart contracts. Clearing House collects and maintains the margin from traders and trades with the AMM on behavior of traders. Strike will provide up to 4x leverage at the onset, and will allow for future changes through governance.

Please see the Clearing House section below for further details.