AMA Summary with AscendEX
The AMA with the founder of Structure Finance was held on the AscendEX EN Telegram group on November 11, 2021, and we also prepared this summary for you to get the gist:
Q: Hey, if you don’t mind, let’s start with the introduction of Structure Finance the history as well as the team? And what problems are you aiming to solve?
F: Sure. We started Structure Finance about two years ago. It is a DeFi platform that brings structured financial products and exotic options to the crypto community. The idea is that our platform will bring together people who want to buy structured products and people who want to serve as structured product issuers.
Think about it this way — structured products are “custom views” on the market that generate money. We are simply removing the intermediaries (issuers) from the structured product issuance/life cycle process by creating a flexible DeFi platform. The way we are building the protocol there are very few limitations in terms of the structure and we can very quickly push new ideas to the market. There is also a community engagement aspect that does not exist in traditional finance — we can crowdsource ideas for payoffs which is gonna be huge.
The team is a mix of people with traditional finance backgrounds. Another co-founder and I come from structured product management and caught the crypto bug a few years ago. Before that, I worked as a portfolio manager and a structured product dealer for several investment banks. Evelina, our Head of Marketing, comes from a pure crypto background and worked on several high-profile projects before this one.
Q: Thank you for your detailed elaboration here. Let’s transition a bit towards the native token — STF, Curious how the STF token functions within the platform and why is it needed?
F: STF is the native token of Structure Finance — it will facilitate the platform fees, incentives, and decentralized governance. First of all, the structured product issuers will be using STF for transaction fees (these and other transaction fees will be stored as a reserve in STF to be released in cases of emergency). Secondly, a separate token pool is intended to encourage users to deposit assets and incentivize a positive feedback loop, there will be token incentives given in STF. Finally, the token holders collectively decide on the platform governance, such as profit-sharing process, new payoffs, or user incentives.
Q: Awesome! Could you share the development status and progress of the project thus far? Including the major partners and perhaps some operational data.
F: On the product development side, we have 3 main products out, addressing three very diverse user groups. There is DNT (double-no-touch option) which is aimed at active traders to let them bet on lack of movement in USD/BTC in the very short term. Then there is VIP (volatility income pools) which is a vault product that allows users to create volatility income without trading options and in a direction-neutral manner. Finally, there are project token wrappers, which allow holders of the project tokens to get yield on their tokens by selling really short-dated options on them.
On the business development side, we have listed our token on Huobi about a month and a half ago. We have also entered into partnership agreements with Coin98, a DeFi wallet platform, and have several other high-profile partnerships in the pipeline. I’d rather not share details yet so I don’t jinx it.
Q: Great! Who will the users/clients be on your platform and what are some examples of use cases for them?
F: The general idea is to build a very flexible structured product platform that’s addressing all kinds of user bases.
We have a class of products aiming at short-term active traders that are interested in highly leveraged payoffs and small-time horizons. Our Double no Touch option, for instance, allows the trader to bet that USD/BTC will stay in a narrow range in the next 5 minutes — thus allowing them to profit from a quiet market. So a boring market can be a good market.
Then we have our VIP — Volatility Income Pool product class where the users can harvest long-term volatility premium (FLOW, short volatility investor pool) or can bet on aggressive movement in crypto (LEAP, long volatility investor pool). The USD/BTC version of the pool is already out on BSC Mainnet and FLOW side has accrued about 90% in the last month alone.
Finally, we have a class of products aimed at holders of project tokens. There is a Yield Wrapper — the user deposits his tokens to this vault to receive guaranteed income by overwriting daily call options. Also, there is a Protective Wrapper — the user deposits his tokens to this vault to receive a guaranteed level of protection while giving up some of the upsides.
As I said, we are aiming to build a very diverse product base and want to take input from the community. If you have ideas for structured product payoffs, feel free to suggest them in our Telegram channel!
Q: Very thoughtful. May I ask what your strategy is regarding attracting more users to your protocol?
F: We’re gonna take a two-prong approach to this. On one hand, we are engaged in community-based marketing via Telegram groups and similar avenues. On the other hand, we are working on partnerships with projects and venues that already have an active user base such as exchanges and wallets. We also have a user referral program that’s coming up shortly.
Q: Let’s talk about the current landscape of other projects doing something similar. What separates you from some of the competitors?
F: There are several projects doing similar things. However, between the founders we have about 30 years of structured product experience — so we have seen it all and can push new products out very quickly. Also, we are building as a community-based project (in terms of structures and fee-sharing) from inception so we should be able to address users’ needs better.
Q: Great. What does success look like for Structure Finance? What are the biggest risks and challenges Structure Finance will need to overcome to consider the project successful?
F: Success would be to have an active community engaged in structured product trading, with a diverse universe of payoffs. The main challenge is getting that community together — bringing new users to the products and reaching people in the crypto world
Q: How does Double No Touch pay in BTC? How does it relate to the DNT price and is there a per-user limit to buy DNT?
F: DNT is very simple. It’s a bet that BTC is not going anywhere in the next 5 min. If the USD/BTC does not touch either of the two barriers in the next 5 min, you double your money. Right now, the maximum amount you can bet is 20 USDT.
Q: I saw that there are two different capital pools in VIP. FLOW and LEAP. How much of the system fees will we receive when we stake the system by investing in both pools? What criteria are taken into account here?
F: As a market maker (i.e. depositing in both pools), you will receive 100% of the fees until the system reaches a threshold TVL after which market makers will receive 80% of the system fees. Also, at the moment, we have a promotional program where we will compensate all losses to the market makers (small losses can happen when VIP pools are severely imbalanced).
Q: You have launched a blockchain-based product, Volatility Income Pools (VIP). What advantages does VIP bring to traders betting on trading options? How does VIP eliminate the risk of volatility? What is the difference between this cash system?
F: It’s a simple model where two pools exchange absolute returns of USD/BTC on an hourly basis. The FLOW pool is harvesting volatility premium, so they are paying absolute returns and receiving a fixed rate from the LEAP pool. LEAP pool is paying a fixed rate to receive an absolute return from the FLOW pool. Since inception in early November, FLOW pool has accrued about 90% of their capital, so “boring is good” :)
Q: Why Structure Finance Binance cares about the use of Smart Chain? Also, do you have any expansion plans for Huobi Eco-Chain? How do you take advantage of Layer2?
F: Binance Smart chain is a popular blockchain with small transaction costs. We are considering expanding to Huobi Eco chain if sufficient user interest is there. We are planning to use some Layer2 solutions.
Q: Great, I guess we’re pretty much finished here! Congratulations on the success thus far! Thank you very much, for being here today and providing us with insights into Structure Finance. Best of luck with the project!
F: Thank you!
