by @Guaaronnnn
editor @FriedWagyuu

Part I. Rage Trade

Intro

Rage Trade is an Omni-chain perpetual protocol built on Uniswap v3. The protocol aims to become the most liquid and composable ETH perpetual on the market by leveraging innovative UniV3 vault strategies that recycle underutilized LP tokens to create deep liquidity.

Perpetuals in crypto grow fast, but the majority of perp trading has been on CEX instead of DEX because CEX offers better liquidity. To provide liquidity, CEX and DEX protocol dYdX both rely on the order book model and professional market makers. For other perp protocols, for example, Perpetual uses vAMM, GMX uses a shared liquidity model, and Overlay uses rebase system. Though these perp protocols can solve the liquidity issue with their special model, they all face similar issues.

Current Issues

• Liquidity Fragmentation: Most perp protocols with the aim of solving liquidity issues would design a new mechanism, but they still need a high level of liquidity captured from the market. Also, protocols using different models/mechanisms lead to poor composability.
• Poor Capital Efficient for LPs: Capital efficiency is critical in DeFi, LP wants to have more ways to increase capital efficiency.
• LP Impairment Loss Risk: For non-order book perp protocols, LPs face a higher risk of impairment loss.

Rage Trade’s Highlights

Rage Trade is able to address the pain points that perp protocols commonly face. With key features of

• ETH perp with 10x leverage
• Omnichain recycled liquidity
• Yield generating 80–20 Vaults

ETH Perp Trade

Rage Trade is powered by UniV3 using a vAMM design. The UniV3 vAMM pool holds virtual tokens (i.e. vETH-vUSDC) that are synthetic representations of underlying tokens in the spot market (ETH-USDC). Traders and LPs use virtual tokens to place orders on the vAMM.

In addition, Rage Trade designed a funding rate mechanism called forward guidance to ensure funding rate match CEX rates. When CEX funding rates and Rage funding rates diverge, forward guidance can switch the funding rate between three methods to keep the rates close to fair value.

Omnichain Liquidity

Omnichain liquidity allows users to deposit yield-generating assets (LP in AMMs, money markets, derivates) from LayerZero compatible chains into Rage. Arbitrum is the host chain where it holds the perp and vaults. Other chains are LP chains where LP collateral is held and managed. Rage uses LayerZero’s cross-chain messaging protocol to pass messages to/from Host Chain and LP Chain. And it uses Stargate to bridge USD PnL to/from the vaults.

Through the Omnichain design, Rage leverages other DeFi protocols’ liquidity via LayerZero and Stargate to composite liquidity with vAMM to provide better liquidity depth for users.

80–20 Vaults

80–20 vaults run an LP strategy on Rage’s ETH perp where 80% of TVL earns yield on an external protocol (outside of Rage, isolated risk) and at most 20% of TVL provides concentrated liquidity on Rage. Rage recycles the LP shares from other DeFi protocols to provide liquidity in Rage’s ETH perp. The goal of the 80–20 vault is to earn additional yield (trading fees, $RAGE token) on the LP position while replicating the payoff of an ETH-USD LP in UniV2.

80–20 Vaults relies on three core operations:

• Rebalance PnL: As the ETH price moves, the LP vault accumulates directional perp positions. The Rebalance PnL operation realizes the PnL from these perp positions and transfers the assets to/from the yield-generating service. This maximizes capital efficiency and maintains sufficient collateralization.
• Update Range: As the ETH price moves, the concentrated liquidity position may hold an imbalance of vETH and vUSDC. Once a day, the update range operation withdraws the current range order and deploys a new range with equal parts USDC and ETH centred around the new price. This maintains balanced amounts of ETH and USDC liquidity around the current price.
• Reset Liquidity: When the price moves dramatically, a large perp position will be accumulated in the vault. Once the size of the position exceeds 20% of the vault’s value, the reset liquidity operation closes the vault to manage risk and the liquidity will be returned to the initial state based on the new vault size.

80–20 vault utilizes the LP shares from other DeFi protocols to achieve better capital efficiency. On the other hand, with dynamically update range and reset liquidity, impairment loss risk is minimized and finally, at least 80% of LP is isolated to protect LP.

Final thought

Rage Trade’s innovative model might be the breakpoint of the DeFi dilemma, liquidity fragmentation, poor capital efficiency, and high impairment loss. Leveraging LP from major DeFi protocols from different chains is a good way to build up its own liquidity, which not many protocols are doing the same thing. Through its 80–20 vault strategy, Rage isolates certain risks and improves capital efficiency at the same time.

Part II. Market Updates

Meta Adds Ethereum, Polygon, Flow NFT Cross-Posting Between Facebook and Instagram
Meta is adding the ability to cross-post NFTs across Facebook and Instagram for select U.S. users. Meta currently supports Ethereum, Polygon, and Flow NFTs on Facebook and Instagram. And when it comes to crypto wallets, MetaMask, Rainbow. Trust Wallet, Coinbase Wallet, and Dapper can be connected to verify and share NFTs.

Crypto Exchange FTX’s CEO Visited White House Amid Regulatory Fight
FTX CEO Sam Bankman-Fried and his government relations and policy team made a stop at the White House in May as lawmakers in the United States debate on whether to have the Commodity Futures Trading Commission (CFTC) or the Securities and Exchange Commission (SEC) act as the crypto industry’s primary federal market regulator.

U.S. Congressional Committee Probes Coinbase, FTX, Binance on Fraud Prevention
Consumer watchdogs within the U.S. House of Representatives believe crypto-related fraud is a massive problem. Chair of the Subcommittee on Economic and Consumer Policy of the House Committee on Oversight and Reform sent letters to the largest crypto exchanges in the U.S. on Tuesday, requesting “information and documents” showing how each company is working to “combat cryptocurrency-related fraud.”

Stablecoin Issuer Tether Dismisses Wall Street Journal’s Claim of Inadequate Reserves
Stablecoin issuer Tether has refuted claims made in a Wall Street Journal report in relation to uncertainty over its balance sheet. Tether said that U.S. Treasury bills have been the premier safe asset for decades in response to the Journal’s claim that the company has a “thin cushion of equity.”

CME Adds Euro-Denominated Ethereum Futures as Merge Approaches
CME Group launched euro-dominated Bitcoin and Ethereum futures on its derivatives marketplace. CME Group launched euro-dominated Bitcoin and Ethereum futures on its derivatives marketplace.

Part III. Fundraising News

Proof — NFT Collective
Raised $50M in a series A funding round led by a16z. Other investors include Collab+Currency, Flamingo DAO, SV Angel, True Ventures, VaynerFund and others.

Sei Labs — Layer 1 blockchain
Raised $5M in a seed funding round led by Multicoin Capital. Other investors include Coinbase Ventures, GSR, Flow Traders and others.

Limit Break — Mobile gaming firm
Raised $200M in two funding rounds led by the chairman of Mino Games, Paradigm and Standard Crypto. Other investors include FTX, Coinbase and Positive Sum.

Xterio — A blockchain gaming platform
Raised $40M in a funding round led by FunPlus, FTX Ventures, Makers Fund and XPLA. Other investors include Hashkey, Foresight Ventures, Headline, Matrix Partners and Animoca Brands.

NFT Genius — Flow Blockchain NFT Marketplace developer
Raised $10.5M in a series A funding round at a $150M valuation led by Dapper Labs, Spartan Labs, Commonwealth Asset Management (CWAM), and Fundamental Labs. Other investors include Spartan, One Football, and Unibanco.

Reference

https://docs.rage.trade/eth-perp
https://medium.com/@ragetrade

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