🌏 Welcome To the SOFA Protocols 🌏
🏗️ What’s A Structured Product?
In a nutshell, a Structured Product is a hybrid derivative that combines the features of multiple financial products into one. Think of it as a financial smoothie. It blends different financial goodies (like bonds and options) into one tasty package. It offers protection and potential profits based on market conditions.
🤔 Why Should You Care?
▶️ Custom Payoffs: Get returns tailored to your preferences.
▶️ Simple Management: One product, no hassle.
▶️ Flexibility: Customize your purchases based on your risk tolerance.
▶️ High Yields: Crypto’s volatility means potentially higher returns.
⛓️ Going On-Chain
In the traditional finance world, getting access to structured products is like navigating a maze filled with gatekeepers who care more about making money off you than helping you grow your savings. This process is opaque, expensive, and exclusive to the wealthy.
Transparency: No more middlemen; clear pricing for all.
Fairness: Accessible to everyone, not just the big players.
Ethereum and Beyond: Launching on Ethereum and other blockchains.
The SOFA protocols will be launched on Ethereum and other L1 EVM blockchains to start.
🔁 How a Trade Works in the SOFA Protocols**
1️⃣ Market Prices: Supporting market makers stream live prices for different products.
2️⃣ User Buys: You pick and buy a product at the shown price.
3️⃣ Lock Assets: Both your assets and the market maker's assets are locked in the Vault.
4️⃣ Tokens Minted: You and the market maker get tokens that represent your positions.
5️⃣ Earnings: For most products, your collateral earns interest.
6️⃣ Claim Payout: After the product expires, you can claim your payout.
🛡️ Position Token Standards and Product Vaults
ERC-1155 Tokens
The SOFA protocols will use the ERC-1155 standard to manage multiple token types within one contract. These tokens can be merged or split, and transferred easily, like ERC-20 tokens. They store key details like expiry and prices.
Product Vaults
SOFA’s product vaults also use ERC-1155 to support tokens with the same parameters, offering flexibility and efficiency. They can support various product types and collateral, with a distinction on principal risk tolerance..
🪙 Position Tokens
Unlocking Assets
Position Tokens make locked assets movable, boosting liquidity in DeFi.
Secondary Trading
You can trade Position Tokens like regular tokens. Owners of the position tokens will always have final ownership of the assets in the vault. This offers you the flexibility to pledge your locked funds for new opportunities.
🏦 A New Standard for Vault Design
The SOFA protocols offer a new way to handle crypto by making transactions clear and safe. It lets you earn based on benefits without worrying about asset safety. All details are recorded transparently on the blockchain, supporting various products. Tokenized positions improve capital efficiency and can be used across DeFi and centralized platforms. Using ERC-1155 tokens saves on costs, and the system is designed to be sustainable and user-friendly.
As our inaugural proof-of-concept, we will initially focus on three popular product structures called Rangebound, Bull Trend, and Bear Trend. All of these products are available in either 'Earn' or 'Surge' formats. Moreover, additional product types will be continually added based on user demand and ecosystem feedback.
Rangebound Product Overview
A Rangebound product helps you make money if an asset, like Bitcoin, stays between two set prices during the observation period. If the price stays within this range, you get an extra profit. You can customize the range: a narrow range means more profit but more risk, while a wider range means less profit but higher chances of winning. If the asset goes outside the range, you still get a guaranteed minimum yield.
Trend Product Overview (Bullish/Bearish)
A Trend product helps you make money if an asset, like Bitcoin, moves smoothly within a set price range. You set a lower and upper price limit with a certain direction (bullish / bearish). If the asset stays within this range at the end, you get a profit based on where the price falls. This product works for both bullish (price going up) and bearish (price going down) scenarios. It also offers some base protection if the price doesn't move as expected.
⚖️ Risk Preference
Earn
If you don't like risk, choose this protocol. Take comfort with maximum downside protection while your deposit earns a steady interest, while enjoying a bonus profit if the market moves in your favor. What's there not to 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 your chosen range, you earn a lot. If not, you lose your purchase amount. Go big or go home?