Crypto trading platform Avantis opens perpetual swaps DEX on Base Network – TradingView News

Perpetual swap exchange Avantis opened for trading on the base mainnet on Friday, offering a new approach to the old problem of balancing crypto futures markets that its founder believes will be attractive to retail traders.

Avantis is one of the first trading protocols to launch natively on Base, the Layer 2 backed by Coinbase, whose proponents are betting that close proximity to the centralized exchange giant could potentially help catapult millions of first-time DeFi users into the online platform . Chain World.

It seems unlikely that such a crowd would immediately flock to the kind of high-risk leveraged trading that Avantis says it offers. But according to a press release, a lot happened during Avantis' two-month testnet, which generated over $5 billion in transactions across 50,000 wallets.

Perpetual swaps are a financial novelty unique to cryptocurrencies. They are essentially futures contracts with no expiration date. The long traders (who believe the price of a token will rise) and the short traders (who believe it will fall) can let their bets run as long as they have sufficient collateral deposited.

But these markets need maintenance: a way to ensure that the price of the futures contract does not diverge too much from the value of the asset it represents. Financing rates characterize the fees that buyers and sellers pay each other, keeping open interest in check.

“The problem is that DeFi and CeFi are all becoming very professionalized, so many market makers are simply taking away any funding rate,” said Harsehaj Singh, CEO of Avantis. “Retailers don’t get a chance to participate in the open interest game.”

Avantis' approach is slightly different. Instead of using funding rates to balance the market, it offers a guaranteed discount to traders who take contrarian positions, perhaps betting that a token's price will fall when most others believe it will rise. This is a risky trade that could very well fail. But the risk is somewhat mitigated by the protocol's promise to repay some of their losses, Singh said.

“It’s designed for people who really just do directional trading,” Singh said in an interview.