The DeFi protocol Shield has developed a smart contract for trading perpetual futures. Shield users can open a short position and profit from a decline in the asset’s price. The concept attracted AT&T Capital and Hashkey Capital, who, along with other investors invested in Shield $2 million.
Trading DeFi futures resembles both options trading and exchanging cryptocurrencies on a DEX. A user opens a position and makes a prepayment to Shield’s smart contract for maintaining it. The smart contract deducts a fee from the account for rolling the position over to the next day. If funds are insufficient, Shield’s liquidators close the position at market price.
In a losing DeFi futures position, the Shield user can lose only the prepayment. At the same time, the maximum profit is not capped.
For example, a user sold 1 ETH at a rate of 300 DAI/ETH and deposited 100 DAI as prepayment:
- on the first day the price rose to 320 DAI/ETH. The user paid 1 DAI to roll over the position;
- on the second day the price fell to 280 DAI/ETH. The user closed the position, retrieved 99 DAI from the prepayment and 20 DAI of profit.
To support the operation of DeFi futures, Shield has implemented a system of dual liquidity pools, a position-liquidation procedure, and an insurance fund. Details on the mechanism are in the Shield White Paper.
On June 7, Shield will conduct an ITO on the Mask platform. The selling price of the native token SLD is $0.045.
Earlier, analysts at Glassnode reported that the DeFi sector did not panic during the May 19 crypto-market drop.
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