What is SOFA Protocol? New DeFi Innovations That Open Access to Complex Financial Products
2024-06-08
Bittime - What's that SOFA Protocol? This is an innovation that offers easy access to complex financial products. So far, financial products like this can only be enjoyed by certain groups in the traditional financial world. SOFA Protocol is here to change things!
What is SOFA Protocol?
SOFA Protocol comes with an ambitious vision to revolutionize the way financial assets are settled on the blockchain. This protocol enables atomic (instantaneous and indivisible) settlement of assets on top of the blockchain.
This also opens the gates for DeFi capital liquidity through transferable Position Tokens.
Let's get to know structured products first
Structured Products are hybrid financial products that combine various features from other financial instruments, such as bonds and options, into one unit. Just think of it like a financial smoothie!
With Structured Products, you can get potential profits and protection depending on market conditions.
Why is SOFA Protocol Important?
SOFA Protocol offers several attractive advantages:
- Customized Benefits: Get returns that match your risk preferences.
- Easy to Manage: With just one product, you don't need to bother managing many financial instruments.
- Flexible: Adjust purchases based on your risk tolerance.
- High Yield Potential: Crypto volatility offers the potential for greater profits.
Easy Access Via Blockchain
In the traditional financial world, accessing Structured Products is complicated and expensive. You have to go through various intermediaries who are more concerned with their own profits. SOFA Protocol comes with a blockchain based solution:
Transparency: No need for intermediaries, product costs can be seen clearly.
Equality: Access is open to everyone, not just the big players.
Launching on Ethereum and Other Blockchains: SOFA Protocol will be coming to Ethereum and other Ethereum Virtual Machine (EVM) compatible blockchains.
How Transactions Work in SOFA Protocol
- Market price: Liquidity suppliers (market makers) display the latest prices for various products.
- Purchases by Users: You choose and buy products at the prices listed. safe.
- Asset Locking: Your assets and the assets of your liquidity supplier are locked in a safe.
- Token Printing: You and liquidity suppliers receive tokens representing your respective positions.
- Income: For most products, your collateral assets will earn interest.
- Payment Claim: Once the product expires, you can claim your payment.
Position Token Standard and Product Vault
SOFA Protocol uses the ERC-1155 standard to manage various types of tokens in one contract. These tokens can be combined or shared, and are easily transferable like ERC-20 tokens. These tokens also store important details such as expiration date and price.
SOFA's product vault also uses ERC-1155 to support tokens with the same parameters, offering flexibility and efficiency. These vaults can support various types of collateral products and assets, with differences in underlying risk tolerance.
Position Tokens: Unlocking Asset Potential
Position Tokens make locked assets more flexible, thereby increasing liquidity in DeFi. With Position Token, you can:
Secondary Trading
You can trade Position Tokens like regular tokens. The Position Token owner will always have final ownership of the assets in the vault. This gives you the flexibility to use locked funds for new opportunities.
New Standards for Safe Design
SOFA Protocol offers a new way to manage crypto by making transactions clear and secure. You can make a profit without having to worry about asset security.
All details are recorded transparently on the blockchain, supporting various products. Tokenized Position Tokens increase capital efficiency and can be used across a variety of DeFi and centralized platforms.
The use of ERC-1155 tokens saves costs, and the entire system is designed to be user-friendly and sustainable.
Types of Products Offered by SOFA Protocol
As an initial proof of concept, SOFA Protocol will focus on three popular product structures: Rangebound, Bull Trend, and Bear Trend. All these products are available in 'Earn' or 'Surge' formats.
Additionally, additional product types will continue to be added based on user demand and feedback from the ecosystem.
Rangebound Products
Rangebound products help you make money if the price of an asset, such as Bitcoin, is between two set prices during the maturity period. If the price stays in this range, you get additional profits.
You can adjust the range: a narrow range means more profit but more risk, while a wider range means less profit but a higher chance of winning.
Produk Trend (Bullish/Bearish)
Trend products help you make money if the price of an asset, such as Bitcoin, moves smoothly within a set price range. You set lower and upper price limits in a certain direction (bullish/bearish).
If the asset stays in this range in the end, you make a profit based on where the price falls. This product works for both bullish (price rises) and bearish (price falls) scenarios.
This product also offers some basic protection if prices do not move as expected.
Risk Preferences
SOFA Protocol offers two protocol options to suit your risk preferences:
Earn
If you don't like risk, choose this protocol. Get maximum protection against losses while your deposit earns stable interest, while enjoying bonus profits if the market moves in your favor. What else can you not like?
Surge
If you like taking risks, this protocol offers higher rewards but with the chance of losing your entire deposit. If the market stays within the range you choose, you will make a lot of profit.
Otherwise, you will lose your purchase amount. Do you want to make big profits or go home empty-handed?
What are Tokens $RCH?
$RCH is SOFA's main token, and you cannot buy it in advance or get it from the developer. To get $RCH, you must use the SOFA.org service.
This ensures that only active users profit, avoiding the rapid and dangerous sell-offs seen in other projects. Every day, users who transact on SOFA.org earn $RCH based on their activity.
In fact, the project developer has no ownership of $RCH on day one - how fair is that? This fair launch method ensures long-term success and benefits for the real users of the platform.
Tokenomics Token $RCH
Total Supply: Capped at 37,000,000 $RCH
Pre-Minted Supply: 67.6% (25 million) is locked in the Uniswap liquidity pool with $ETH
Airdrop Supply: 32.3% is distributed to users according to the predetermined release schedule
Use of Revenue: All SOFA protocol earnings buy and burn $RCH from Uniswap
Deflation Mechanism: Increased transactions lead to more $RCH burning, reducing supply and increasing value
Long Term Value: The price of $RCH rises with protocol usage, benefiting active users and holders
Airdrop $RCH
Furthermore, the remaining 32.3% (12 million tokens) of $RCH will be distributed to ecosystem users according to a predetermined release schedule.
Initially, 12,500 $RCH tokens will be distributed daily for the first 180 days. After that, the airdrop amount will decrease by 20% gradually every 180 days without limit.
Conclusion
SOFA Protocol comes as a breath of fresh air in the world of DeFi. By offering easy access to complex financial products and a transparent and secure system, SOFA Protocol opens up new opportunities for investors to enhance their portfolios.
Plus, $RCH's unique and fair token model provides benefits to active users and token holders. SOFA Protocol is worth considering for those of you who want to explore the world of DeFi in a smarter and more profitable way.
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