The Edge Podcast - Cadence: A Cross-Chain Perps Aggregator

In this episode of The Edge Podcast which took place on March 22, 2024, DeFi Dad Nomatic, Vivaldi, and Mozart discuss Cadence protocol, their background, intent-based perps, and more. Read our notes below to learn more.

Background

DeFi Dad (Host) – Host of Edge Podcast
Nomatic (Host) – Co-Host of Edge Podcast
Vivaldi (Guest) – Co-Founder of Cadence Protocol
Mozart (Guest) – CTO of Cadence Protocol
Cadence Protocol – an intent-centric perpetual aggregator

Founding Cadence

Vivaldi says that Cadence is an intent-based perpetuals aggregator facilitating rapid execution of trades across different chains. Traders can easily select an asset like Ethereum, choose leverage (e.g., 10x), and the protocol finds the best liquidity path for the trade. Users receive trade suggestions from the protocol, such as splitting a trade between different perpetual protocols like Kwenta and GMX. The protocol aims to provide efficient trading experiences by optimizing liquidity paths for users’ trades.
He adds that Cadence is the flagship decentralized perpetuals protocol on Canto.
Mozart shares his background, having worked at a big consulting company and Kraken exchange before joining Cadence. The core contributors, including Beethoven and Chopin, previously worked together as blockchain engineers at a consulting company. Chopin’s background in traditional finance and aerospace adds diversity to the team’s skill set.

What is Cadence?

Vivaldi says that Cadence evolves every six months with a roadmap focusing on creating the future of crypto. The phases include a perpetual protocol on Canto transforming into an intent-based Perpetual aggregator. Initial launch features a perpetual protocol aiming for capital efficiency using liquidity with various assets like Canto stablecoin.

How they’ll launch COIN trading

Vivaldi says that upcoming trading pairs like stocks on Cadence, enhance the platform’s offerings for DeFi traders. Coinbase stock integration is planned soon to expand asset options within the decentralized perpetual protocol.
He adds that utilizing RWA-like bonds to create efficient pools for Perpetual trading on Canto.
Vivaldi says that real-world assets are being integrated into Canto’s perpetuals, with a focus on utilizing native RWA providers. Unlike synthetic versions, this implementation allows for actual trading based on real asset values rather than simulated prices. The leverage expected on coin is 50x, providing significant trading opportunities for users.

What is an intent-centric perps aggregator?

Mozart says that “Intents” refer to specifying trade desires instead of exact execution paths in DeFi protocols. This approach allows solvers within the community to determine optimal trade solutions based on stated intentions, enhancing flexibility and efficiency.

Why build on Canto?

Vivaldi says that the decision to build on Canto stemmed from personal connections with core contributors and admiration for their unique approach to DeFi and crypto projects.
He adds that he has recently become more engaged with the Canto Community due to its distinctive features and ideas. Participation was sparked by encountering interesting public goods infrastructure upon launch and further deepened after a podcast discussion with Scott Lewis. He emphasizes the community’s organic grassroots nature as a key factor contributing to its undervalued status compared to other chains. –

Recent launch of Cadence Perps

Mozart says that positive sentiment prevails within the community following Cadence’s launch, evidenced by significant adoption rates and favorable feedback at events like ETH Denver. A notable increase in trading volume from $7 million to over $23 million within a day showcases strong traction post-launch.
He adds that adoption strategies such as early incentive programs and active engagement on Discord contribute to fostering inclusivity and community support. –

What is Symphony?

Vivaldi says that Symphony serves as an intent-based perpetual aggregator facilitating rapid cross-chain position execution for traders.
He adds that users can leverage Symphony for seamless trades across various protocols without concerns about gas fees or liquidity fragmentation.

Design behind the aggregator

Mozart says that the journey toward Symphony began around six to seven months ago with a focus on building an intense-centric aggregator.
He adds that they were initially exploring on-chain trading methods without optimistic execution approaches led to collaborations with LayerZero Labs and Axelar team members. Extensive work with LayerZero team revealed challenges in achieving fast trade executions even on quick Layer-2 solutions like Polygon and Arbitrum.

Example of a trade

Mozart says that users initiate transactions by specifying their intent within a connected wallet linked to Symphony. Solvers analyze user intents across multiple blockchains and protocols to identify optimal execution strategies with minimal slippage and fees.
He adds that users select preferred solutions presented by solvers through account abstraction-based transactions for seamless execution. Upon user confirmation, transactions are sent to destination chains where positions are opened swiftly using collateral from solvers.
Mozart says that after position openings on destination chains, a layer zero or Axel callback validates successful position creation or triggers necessary corrective actions if failed.
He adds that intent-based protocols rely on charging high fees to users for revenue sustainability. Cadence Perpetuals introduces a model where revenue is generated through protocol-owned liquidity without burdening users with high fees.

Cadence stablecoin coming

Mozart says that the Cadence stablecoin is built on an application-specific dollar framework, offering a 5% yield by supplying notes to the Canto lending market. The stablecoin is pegged to $NOTE, earning around 5-6% APY backed by treasury bills, with revenue shared back to users or used for token buybacks.
He adds that Cadence Perpetuals ensures stability is crucial due to liquidity challenges faced by stablecoins; liquidity enhances usability and trading activity. A stablecoin’s value lies in its liquidity; utilizing Cadence’s pool helps grow solid and usable liquidity for active trading.

Positive-sum approach

Vivaldi says that an Omnichain stablecoin addresses cross-chain payment discrepancies like gas payments, fostering interoperability across different systems.

$CAD value accrual

Mozart says that Cadence serves as the core element around which everything is built in the DeFi ecosystem. The goal of Cadence is to eliminate centralized parties from trading and lending processes, aiming to disrupt the traditional financial model where such parties typically generate 95% of revenue.
He adds that revenue distribution within Cadence ensures that 100% of revenues go back to $CAD stakers and liquidity providers, emphasizing a community-centric approach.
Mozart says that registered solvers on the platform require a stake in $CAD, creating demand for the token. Solvers receive fees in $CAD for providing optimal trades, while malicious behavior may lead to the slashing of staked tokens as a form of penalty.

Closing and Symphony Launch

Mozart says that a referral system is set to launch soon, allowing users to earn revenue by referring others to join using personalized links.

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Show Information

Medium: YouTube (Video)
Show: The Edge Podcast
Show Title: Cadence: A Cross-Chain Perps Aggregator
Show Date: March 22, 2024