Comparing capital efficiency
An extensive comparison of SYMMIO and other on-chain derivatives protocols.
Last updated
An extensive comparison of SYMMIO and other on-chain derivatives protocols.
Last updated
Instead of the standard LP-centric models, where liquidity providers take on systemic risk, SYMMIO isolates risk per "Symmetrical Agreement," Symmetrical Agreements are isolated instances between two parties.
This innovative approach paves the way for unprecedented capital efficiency. While also bypassing the throughput limitations of on-chain order books.
With SYMMIO, we're not just evolving the derivatives space but redefining it.
Peer-to-peer transactions are similar to order books where one party's Short position corresponds to another party's Long position.
Delegated match-making process from a (de)centralized Orderbook engine to decentralized frontends & MarketMakers (hedgers) directly using a request-based system allows SYMMIO to sidestep the throughput problems of "on-chain order books"
SYMMIO employs automated Markets for Quotations (AMFQs) to merge the capital efficiency of order books with the on-chain experience of Automated Market Makers (AMMs). This results in increased efficiency akin to Orderbooks while preserving the throughput characteristic of virtual AMMs.
Snapshots were taken on the 5th of May from each individual dashboard or analytics page
Source GMX data from 05.05.2023
Source Cloverfield data from 05.05.2023
Source Gains data from 05.05.2023
Source Level data from 05.05.2023
NOTE: The total value locked (TVL) data for this section was obtained from the sources listed above. Please note that we cannot guarantee the accuracy of the respective dashboards of other protocols; the data was used as is.
total LP TVL (onchain)
24,431
561,304,807.00
Open Interest (across all markets)
524,342
147,464,272.00
total LP TVL (onchain)
38,847,672.00
28,579,275.00
available OI (across all markets)
31,500,000.00
2,262,752.00
Upon initial examination, it's noticeable that the TVL to Open Interest ratio on Symmio is significantly greater when compared to TVL to Open Interest ratio of other vAMM based protocols.
While on GMX, LPs provided $561,304,807.00 in total TVL and "only" $147,464,272 was available across all markets at the time of our snapshot.
The SYMMIO LP has provided $240,431 in liquidity in SYMMIO's on-chain contracts. However, they were able to open trades up to 524,342 at the time of writing,
While at the moment of the snapshot the Counterparties balance onchain could have been very low, it was not critical, yet and as long as the MarketMaker can provide enough collateral intime his position will be considered healthy.
How exactly did we arrive at the 24.76 TVL to OI ratio for BTC short on SYMMIO, while GMX only had a level of 0.034, showcased in the diagram aboveHow does SYMMIO AMFQ technology compare to vAMM models?
Lets take a look at the raw data for that:
total LP TVL (onchain)
24,431.84
561,304,807.00
MAX SHORT OI on BTC
605,000.00
19,318,657.00
total LP TVL (onchain)
38,847,672.00
28,579,275.00
MAX SHORT OI on BTC
10,000,000.00
7,806,255.79
Pretty simple, we took the collateral deposited by LPs divided by the maximum open interest that was available to short BTC at that time.
We arrive at the values displayed on our initial comparsion graphic How does SYMMIO AMFQ technology compare to vAMM models? Clover: 605,000 divided by 24,431.84 = 24.76
GMX: 561,304,807 divided by 19,318,657 = 0.344
GAINS: 38,847,672 divided by 10,000,000 = 0.2574
LEVEL: 28,579,275 divided by 7,806,255 = 0.2731
Symmio presents a platform that provides true leverage not only for traders but also for market makers. Liquidity providers (LPs) are exempted from overcollateralization due to the platform's capability to isolate each trade, thereby eliminating all tail-end risks associated with an unsound system. In this context, an unsound system is defined as a system where every long position lacks a corresponding short position, as its present in current vAMM perpetual DEXs that we will discuss in this gitbook section.
The SYMMIO system resembles more the likes of a perpetual OrderBook model, where every long position that can be bought is another parties short position. Moving forward, the understanding of different market models will be necessary for the comprehension of the text.
The conventional obligation for overcollateralization to cover for potentially significant profits of successful traders is rendered obsolete in our system. All elements are isolated, and as each short position is equally counterbalanced with long positions, tail-end risk is effectively eliminated.
In vAMMs on the other side if there's a situation where long positions exceed short positions, and a surge in the overall market induces significant losses for the LP, vAMMs systems necessitate substantial excess capital to alleviate these losses. Symmio's system, on the other hand, mitigates this requirement, facilitating a much larger proportion of the capital to be actively involved in trading, instead of just being a "safety cushion"
Market makers have a well-defined role within this system: they are obligated to contribute a base amount of capital upfront, but require swift responses from an MM should the position move against them, requiring the provision of additional collateral for the trade. Symmio functions on a peer-to-peer basis, ensuring that a market maker who fails to provide sufficient collateral during unfavorable trade conditions to be treated the same as any typical user. In such scenarios, the market maker is subject to liquidation, leading to the loss of their maintenance margin.
Therefore they are highly incentivized to rebalance their trades quickly, providing only capital where its needed, therefore greatly increasing their capital efficiency.
Thus, SYMMIO offers true leverage and dramatically heightens capital efficiency.
In the vibrant ecosystem of decentralized finance (DeFi), capital efficiency is a crucial metric determining the effectiveness and competitiveness of different platforms. This metric encapsulates how effectively a platform uses its deposited capital to generate returns or facilitate transactions. In this context, let's evaluate and compare the capital efficiency of four contemporary DeFi platforms: SYMMIO, GMX, Level, and Gains.
When we directly compare these platforms, striking differences become apparent. For every $1 deposited as a Liquidity Provider (LP) into the SYMMIO Engine, users can short an astounding 719 times more Bitcoin ($BTC) than they can on GMX. This advantage expands to around 96 times more than Gains and 90 times more than Level.
To put these statistics in perspective:
A $1 deposit into SYMMIO permits users to short $24.76 worth of BTC.
The same $1 deposit into GMX would allow users to short only $0.034 worth of BTC.
A $1 deposit into Gains enables users to short $0.257 worth of BTC.
Finally, a $1 deposit into Level as LP allows traders to short $0.273 worth of BTC.
These stark contrasts highlight the superior capital efficiency of SYMMIO when compared with other vAMMs.
SYMMIO protocol's advantage stems from enabling true leverage inside its system, while its counterparts—GMX, Gains, and Level—rely on over-collateralization. This crucial distinction is attributable to the design of the respective platforms.
Virtual automated market makers (vAMMs), utilized as GMX, Gains, and Level, AMMs were not inherently built for derivatives trading; they were invented for spot trading.
Furthermore, acting as a liquidity provider (LP) in these protocols comes with its own risks, primarily because traders' wins correspond to LPs' losses.
SYMM IO, on the other hand, operates on a fundamentally different principle. Every trade is isolated, akin to how orderbooks function in traditional markets. This means that every short position has a corresponding long position—hence the name "SYMMIO." This unique design significantly boosts its capital efficiency and user-friendliness.
A key metric to gauge the performance of these platforms is the ratio of Open Interest (OI) to Total Value Locked (TVL). Here's how they compare for shorting BTC:
SYMMIO has an available OI to TVL ratio of 24.76.
GMX's available OI to TVL ratio stands at 0.034.
Level's available OI to TVL ratio is 0.273.
Gains' available OI to TVL ratio comes to 0.257.
These figures reiterate the formidable capital efficiency of SYMMIO when juxtaposed with vAMMs.
In conclusion, this capital efficiency comparison showcases the compelling advantages offered by SYMMIO. Its ability to maximize the use of capital, enhance leverage without over-collateralization, and maintain a high OI to TVL ratio demonstrates the platform's robust design and potential for growth in the fast-paced DeFi sector.
This distinction in capital efficiency is further underscored when considering more "exotic" trading pairs on the respective platforms. SYMMIO enables users to trade the entire Binance Futures market on its interfaces, with approximately 200 pairs available.
The sheer diversity of tradable pairs on SYMMIO is a compelling feature not readily found on vAMMs platforms. This disparity can largely be attributed to the superior capital efficiency of SYMMIO. When comparing the available Open Interest (OI) on exotic pairs across these platforms, SYMMIO's supremacy becomes exceptionally apparent.
It's worth emphasizing that, despite the figures appearing almost fictitious, the values cited are grounded in reality and reflect SYMMIO's remarkable capital efficiency and diverse trading possibilities.
The expansive range of trading pairs and exceptional capital efficiency will place SYMMIO at the forefront of decentralized trading platforms, shaping it into a robust, versatile, and user-friendly platform designed to cater to a broad spectrum of trading needs.
A key metric to gauge the performance of these platforms is the ratio of Open Interest (OI) to Total Value Locked (TVL). Here's how they compare for shorting $LINK:
SYMMIO has an available OI to TVL ratio of 24.76.
GMX's available OI to TVL ratio stands at 0.00073.
Level's currently doesn't offer exotic pairs.
Gains' available OI to TVL ratio comes to 0.051.
To put these statistics in perspective:
A $1 deposit into SYMMIO permits users to short $24.76 worth of Link (the same as for BTC).
The same $1 deposit into GMX would allow users to short only $0.00073 worth of LINK.
A $1 deposit into Gains enables users to short $0.051 worth of LINK.
A $1 deposit into Level as LP allows traders to not short any exotic pairs.
This feature of superior capital efficiency is notably evident in the comparative availability of collateral for trading across different platforms. Platforms relying on vAMMs often make compromises, particularly regarding the OpenInterest availability transition from a highly liquid pair like Bitcoin ($BTC) to a more illiquid one like Chainlink ($LINK).
Such a transition typically results in a noticeable reduction in the available Open Interest (OI) to Total Value Locked (TVL) ratios on these platforms. This is not the case with SYMMIO, where the ratio remains constant irrespective of the underlying liquidity of the trading pair, as SYMMIO doesn't rely on virtual markets but allows for real market creation using its AMFQ technology.
This consistency is a testament to SYMMIO's ability to maintain capital efficiency across a broad spectrum of trading pairs. It underscores SYMMIO's potential to provide a global equitable derivatives trading experience.
In presenting the comparative diagrams throughout this Gitbook, we wish to acknowledge that these visuals, based on concrete implementations and data from our live testing on Cloverfield, may appear extreme and skewed towards favoring request-based technology.
We understand that the liquidity in vAMMs (like GMX) is distributed across various assets. As such, assets with lower liquidity or "weights," such as $LINK, understandably have a lower available OI for trading. However, we question if this model is optimal for enabling derivatives trading. Capital efficiency and liquidity should be uniformly available across all markets, a vision we deem only attainable through AMFQ or other "request-based" technologies.
Indeed, 2022 saw many leading decentralized exchange protocols introduce solutions to facilitate high-speed, request-based trading. Noteworthy examples include Cowswap and Uniswap's "just-in-time liquidity" approach. Our diagrams represent the stark differences between AMM visually and request-based MM on-chain trading.
We also acknowledge that request-based technologies are still in their early stages. However, we also recognize the significance of our contribution in this field. We hope this article has elucidated the immense potential that Request-Based technologies hold for on-chain derivatives trading.
