Equation: A New Star in DEX Perptual Futures Using BRMM Mechanism

Equation has performed brilliantly since its launch a month ago, with a total locked value of (TVL) growing threefold and trading volume reaching 500 million USD. Whether in product design, token economics, or user experience, Equation has demonstrated comprehensive strength, setting a benchmark for other startup projects.

This article will delve into the Equation project, revealing the key factors behind its success in the Perptual Futures DEX space.

Market Opportunities for Perptual Futures DEX

In the field of spot trading, the decentralized exchange (DEX) has already captured a significant market share. However, in terms of Perptual Futures trading, the on-chain trading volume still lags far behind that of centralized exchanges. Data shows that the on-chain contract trading volume accounts for only about 1.5% of that of centralized exchanges, indicating that there is still ample room for development for on-chain Perptual Futures trading platforms.

Currently, numerous on-chain Perptual Futures exchanges are emerging like mushrooms after rain, utilizing different technical solutions to implement perpetual trading functions. As a new platform, Equation has quickly attracted a large number of users with its innovative product mechanism and trading mining strategy, with its total locked value (TVL) surpassing 16 million US dollars.

Product Mechanism Analysis

Perptual Futures Overview

Perptual Futures are a type of derivative contract without an expiration date, with the main difference from traditional futures being that they can be held indefinitely. This flexibility makes them a popular tool in cryptocurrency trading, often supporting high leverage trading, offering higher potential returns than spot trading, but also increasing the associated risks.

Perptual Futures use a funding rate mechanism to ensure the periodic convergence of contract prices with the underlying asset prices. The funding rate is determined by the market, typically in a bull market, where longs pay fees to shorts, and the opposite occurs in a bear market.

Innovative design of Equation

1. Trading Mechanism:

   • Establish independent trading pools for different trading pairs
   • Liquidity Provider ( LP ) as the counterparty
   • When users open, close, or are liquidated, LP automatically opens a reverse position.

2. Pricing Method:

   • Adopting the innovative BRMM( Balance Rate Market Making) mechanism
   • BR(Balance Rate) reflects the LP position status.
   • Perptual Futures prices are determined by both BR and index prices.

3. Funding Rate:

   • Dynamically adjust based on the BRMM model
   • Consider the direction of LP positions to determine the flow of funds

4. User Experience Optimization:

   • Provide the industry's lowest maintenance margin (0.25%)
   • Support up to 200x leverage trading
   • Establish a risk buffer fund (RBF) to protect LP interests

Token Economics Design

The token ecosystem of Equation includes functional tokens (FT) and non-fungible tokens (NFT), maximizing user participation through 100% fair distribution.

1. EQU Token:

   • Native token, 100% generated through mining
   • Empowered by the ve model, locking EQU-ETH LP can obtain veEQU
   • veEQU holders can share 25% of the trading fees from the protocol.

2. EFC Series NFT:

   • Member: Aimed at ordinary promoters, can generate referral codes.
   • Connector: Exclusive to the core promotion team, can mint Member NFT
   • Architect: Exclusive to the core development team, enjoys a share of trading fees

Through this multi-layered token design, Equation effectively incentivizes various participants, promoting the healthy development of the ecosystem.

Summary

Equation, as a newcomer in the Perptual Futures DEX field, has successfully attracted a large number of users and capital through its innovative BRMM mechanism, flexible product design, and comprehensive incentive system. Its rapidly growing TVL and trading volume prove the market recognition of its products. For other startup projects, Equation's successful experience is worth learning from, especially in the areas of product differentiation, user experience optimization, and token economics design.