Introduction to Premium Trading
New growth engine for Web3 economy
Overview of Premium Trading
We are proud of being the first to propose Premium Trading that brings a paradigm shift in DeFi trading. It generates high-yield returns for users by unlocking additional values that are not discovered in a variety of assets, such as cryptos, inscriptions and RWA stocks.
Premium Trading addresses the liquidity trinity problem by boosting liquidity sustainability, reducing asset inflation and enhancing capital efficiency in DeFi. Therefore, both projects and users can grasp benefits from Premium Trading.
(1) For projects:
Sustainably produced liquidity - democratically sourced and not powered by inflationary means
Reduce token dump pressure
Tokenomics refinement and healthy market making
(2) For users:
Assets appreciation - a new access to receive high APR
Risk control - reduce market exposure
Improve capital efficiency
About Premium
Premiums cannot be achieved instantaneously, but released nonlinearly instead. An unfreezing period is required and dependent on factors affecting the speed to unfreeze corTokens.
Premiums mainly come from two dimensions - time and trade.
First of all, the intrinsic value of assets fluctuates as time goes by. Theoretically, the longer an investor holds an asset, the higher the premium may become. When users participate in premium pools, they gain leveraged returns in exchange of a period of time.
The price of corTokens depends on the supply and demand, so trading strategies are highly applicable. Trading strategies, such as trend prediction strategy, long-term holding strategy and market sentiment strategy, can have an impact on asset premiums because different trading strategies may result in different trading prices and market behaviors. Since the corToken market is essentially a trading market, it follows this principle.
The synergic effect of these two dimensions enables users to make their own optimal choices.
About Liquidity Incentives
Incentives plays crucial roles in liquidity provision. Unlike most of DeFi protocols that attract liquidity by giving back governance tokens, we innovate Premium Incentive Mechanism (PIM) that actively encourages users to add liquidity without producing token inflation.
Traditional incentive mechanisms of staking and liquidity mining discourage users to continuously add liquidity due to decreasing APY over the time. Participants mine and sell, which leads to a vicious circle that introduces inflation and causes losses of user assets. PIM is reasonably designed to fulfill the desire of users to pursue more economic value to their assets on hand and improve the capital efficiency.
About Asset Classes
The business model behind premium trading is applicable to all assets that have been listed on centralized exchanges and decentralized exchanges. The main categories of assets that Coral Finance include/will include are:
mainstream cryptos, such as BTC and ETH
all of altcoins
Inscriptions
RWA assets, specially stocks
Comparison to other staking solutions
Premium Trading | Staking Pool | Liquidity Mining | ve-Token Model | |
---|---|---|---|---|
Asset Classes | Omni-asset (excluding NFT) | Limited | Limited | Limited |
Trading Scenario | ✅ | ❌ | ❌ | ❌ |
Long-term Token Dump Pressure Control | Strong | Weak | Weak | Strong |
Additional Native Asset Bubble | 🤩 | 😫 | 😫 | 😫 |
Participation Incentives | High | Low | Low | Low |
Competition Involved | ✅ | ❌ | ❌ | ✅ |
Lasting Period | Flexible | Short | Short | Long |
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