The protocol for derivatives on blockchains
EthosX is a decentralized finance platform creating end-to-end financial derivatives on blockchains. No centralized exchanges, clearinghouses, depositories, clearing banks, CSD participants etc. required. We are starting with cryptocurrency options first, with the intention to move towards other crypto derivatives and traditional finance derivatives eventually. For example, one can buy a bitcoin hedging token directly from EthosX without involving any exchange or counterparty and earn profits when the bitcoin price is falling (similar to a put option). It is perpetual and is completely on-chain, end-to-end. It is held as a token in wallets and can be sold/transferred to anyone at any time. At institutional level, using EthosX’s options infrastructure two hedge funds can trade high-value on-chain options with each other directly without involving any banks or brokers with zero counterparty risk and zero settlement risk. We are also providing derivatives infrastructure to other crypto companies who want to use these products as a part of a larger package to their customers. Global derivatives ecosystem is broken. Derivatives trading in traditional finance has way too many gatekeepers and intermediaries. Crypto was supposed to be free of these issues and a solution to all of this, but it is itself getting more and more centralized with disastrous consequences. We at EthosX intend to pick the best of both worlds and change the way retail and institutional financial derivatives are traded world over.
Active Founders
Deepanshu ., Founder
Deepanshu is Co-founder and CEO of EthosX. He has been a quantitative finance professional for over 8 years. He is very passionate about using the blockchain technology generally and cryptocurrencies specifically to solve real world problems, especially problems related to financial markets. He was Vice President of Quantitative Research in the Global Derivatives Clearing business at JP Morgan Chase before EthosX . He studied engineering at IIT Kharagpur and obtained his MBA from IIM Calcutta.
Smit Patoliya, Founder
Smit did B.Tech. in Chemical Engineering from IIT Madras. He has worked in quantitative finance most of his career and has keen interest in financial derivatives. At EthosX, he aims to build end-to-end derivatives solutions on blockchain.
Company Launches
Hi all, we are Smit & Deepanshu and we are super stoked to announce EthosX!
🚀TL;DR
EthosX makes it easy for crypto companies and financial institutions to sell on-chain derivatives to their customers and trade with each other. For example, using EthosX’s options infrastructure two hedge funds can trade high-value on-chain options with each other directly without involving any banks or brokers with zero counterparty risk and zero settlement risk.
❓Problem
Global derivatives ecosystem is broken. Derivatives trading in traditional finance has way too many gatekeepers and intermediaries. This leads to inefficiencies and things falling apart every other day. As insiders, we have seen how much everything hangs by a thread. With USD 600 Trillion dollars (notional value) at stake, one would expect things to be better, but they aren’t.
Crypto was supposed to be free of these issues and a solution to all of this, but it is itself getting more and more centralized with disastrous consequences, as was clearly evident in the last few months. With every other crypto exchange/bank running away with user’s funds, one can hardly blame the users/traders/investors if they don’t trust centralized entities for complex products like derivatives.
🎯Solution
We are bringing the entire derivative trading lifecycle on blockchains end-to-end (trading, clearing and settlement).
Institutions can trade directly with each other on-chain via smart contracts created by us without involving any banks, brokers or exchanges. These trades have zero counterparty risk as the net payoffs are locked in the code. The settlement of these derivatives is automatic and done with the help of on-chain oracles and therefore the settlement risk is also zero.
We are also adding a Request-For-Quote system which will help bring more liquidity to these trades.
Now, due to regulatory and technical reasons, this cannot be done yet for traditional finance derivatives, so we are starting with cryptocurrency derivatives first and will eventually go towards traditional finance as well.
We are providing derivatives infrastructure to other crypto companies as well who want to use these products as a part of a larger package to their customers. E.g. DeFi lending protocols can offer liquidation protection to their borrowers using our solutions.
We have also created perpetual options which are live (testnet) on our website and can be traded by retail traders and institutions alike. The instructions to trade them are here.
📒Backstory
Together we have spent nearly 15 years in quantitative finance and have seen, very closely, all the points where the derivatives ecosystem falls apart. Deepanshu was a Vice President at the Quantitative Research team of JP Morgan Chase and Smit was working at a quantitative hedge fund trading options before they came together again for EthosX. It is kind of an open secret that blockchain tech can potentially eliminate many of the issues in derivatives life-cycle which have persisted for years/decades.
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💁How can you help
- If you are at a financial institution and want to understand how large derivative trades can be done on-chain with no settlement risk and zero counterparty risk, please reach out to us at contact@ethosx.xyz or directly message us on Linkedin
- If you are at a crypto company/protocol and need to use crypto derivatives for hedging your treasury or offering some price-volatility-protection to your customers, we will be happy to help! (email / Linkedin)
- If you are a trader, please try out our (testnet) perpetual options at www.ethosx.xyz (metamask required)