Revelo Roundtable #16 - Perps Part 3 - Revelo Intel

Revelo Roundtable #16 – Perps Part 3

In this episode of Revelo Intel’s Twitter Spaces, which took place on June 6, 2024, Kirk hosted Pedro from Zaros, Se from dYdX, Vivaldi from Cadence, and Sehaj from Avantis to discuss the evolution and future of perpetual DEXs, innovative solutions for liquidity and UX challenges, and more! Read our notes below to learn more.


Kirk (Host) – Head of Business Development at Revelo Intel

Pedro (Guest) – CTO at Zaros

Se (Guest) – Team at dYdX

Vivaldi (Guest) – Team at Cadence Protocol

Sehaj (Guest) – Team at Avantis 

Zaros – a perpetuals DEX powered by Boosted (Re)Staking Vaults that supercharge LST & LRT yield on Arbitrum and Monad

dYdX – a leading Perpetuals DEX

Cadence – an Intent-centric Perpetuals Aggregator

Avantis – a perpetuals platform for crypto & real-world assets


  • Pedro from Zaros introduces himself as a blockchain engineer with five years of experience, previously working at Illuvium. He highlights his passion for DeFi and the goal of bridging the gap between centralized and decentralized perpetual trading. Zaros aims to offer features that attract both DeFi natives and CeFi traders, leveraging DeFi’s inherent benefits like self-access and composability.
  • Se from dYdX introduces himself, noting his role in leading the core trading experience and his previous work in business development. He explains that dYdX is developing an L1 blockchain using the Cosmos SDK, currently serving perpetual DEXs with plans to integrate CosmWasm for a general-purpose L1. The aim is to eliminate counterparty risk and enhance self-custody for users trading various assets.
  • Vivaldi from Cadence introduces himself, highlighting his background in blockchain engineering and work at ConsenSys on MetaMask. Cadence Protocol addresses issues of user experience and liquidity fragmentation by building an omni-chain execution layer for perpetuals. This allows users to execute trades across different chains seamlessly. Cadence has also launched its own perpetual protocol focused on real-world assets and niche markets.
  • Sehaj from Avantis introduces himself, discussing Avantis’s focus on novel assets and leveraging Coinbase’s Base chain for better distribution. Avantis lists unique assets that centralized exchanges avoid and has seen success with real-world assets. Sehaj also mentions their innovative loss protection mechanism, which provides rebates to traders on the non-skewed side, encouraging arbitrage opportunities and enhancing trader incentives.
  • Sehaj explains that the loss protection rebate on Avantis is effectively covered by LPs (liquidity providers). He compares it to traditional funding rates in AMM-based DEXs, stating that LPs incentivize traders to balance the market by subsidizing the other side. This subsidy helps LPs remain delta neutral, balancing their risk.

Addressing UX Challenges in Perpetuals Trading

  • Kirk asks about UX models in perpetual DEXs, highlighting the importance of solving UX issues in DeFi. 
  • Pedro from Zaros highlights several UX challenges in DeFi perpetual trading, emphasizing capital efficiency. He explains that Zaros addresses this by utilizing liquid staking tokens and clustering assets with similar risk profiles. This allows for higher utilization rates and better risk management. Additionally, Zaros incorporates native account abstraction for easy onboarding, social recovery features, and cross-margin capabilities, making it easier for users to manage positions.
  • Se from dYdX discusses their decision to use an order book model, emphasizing its advantages in liquidity provision. He notes that while orderbooks can be challenging to bootstrap, they offer significant benefits once liquidity is established. He mentions that dYdX’s model, similar to centralized exchanges, makes it easier for market makers to participate. Despite the challenges of maintaining an efficient order book in a decentralized network, dYdX continues to iterate on this model to provide the best value to traders.
  • Vivaldi from Cadence explains their omni-chain execution layer, which abstracts chains and allows users to execute positions across multiple chains seamlessly. This approach addresses liquidity fragmentation and improves the user experience by providing better trade execution. He mentions that Cadence aims to make perpetual trading more accessible and efficient, offering a unique solution to the UX challenges in DeFi.
  • Sehaj from Avantis highlights their focus on novel assets and innovative incentive structures. He mentions that Avantis offers loss protection rebates to traders, balancing market risk and providing new arbitrage opportunities. This approach helps attract traders and improves market liquidity, addressing some of the key UX issues in DeFi trading.

Cadence’s Intent-Based Approach

  • Kirk asks Vivaldi to explain Cadence’s model, specifically regarding intents and bilateral agreements.
  • Vivaldi elaborates that Cadence focuses on solving liquidity fragmentation by splitting trades across various DEXs rather than relying on centralized exchanges. He explains that their intent-based model uses existing decentralized liquidity and allows trades to be executed across different perp DEXs. 
  • Vivaldi also highlights improving the user experience by simplifying the onboarding process, reducing it from several steps to just a few clicks. Cadence aims to abstract the complexity of blockchain interactions, making it seamless for users to trade across chains without worrying about the underlying technology.
  • Vivaldi explains that Cadence uses an intent-based architecture where a solver fronts the collateral on the destination chain (e.g., GMX on Arbitrum) while locking up the user’s collateral on the source chain (e.g., Base). The system then uses a LayerZero callback for security, ensuring the trade is validated and the solver receives the locked collateral once the trade is confirmed.
  • Sehaj says that Avantis uses a fully $USDC-based stablecoin architecture and a synthetic model to list assets that are not commonly traded on-chain, such as Forex, metals, and crude oil. He mentions that Avantis aims to leverage composability across the base chain once they grow significantly in TVL. 
  • Sehaj acknowledges the benefits of intent-based models and expresses openness to integrating cross-chain trading, allowing users to trade on Base without needing to know the underlying mechanics.

Incentivizing Liquidity Providers

  • Kirk remarks on the ongoing issues of liquidity fragmentation in DeFi and how different protocols are addressing this challenge. He highlights the importance of incentivizing market makers and solvers to help scale DEXs.
  • Pedro from Zaros says that they recognize the strengths of AMM-based models for scaling and initial implementation but believe in a hybrid model combining AMM and order book features. Zaros facilitates single-sided LPing of long-tail and yield-bearing assets, making it easier to onboard LPs. They are also integrating with platforms like Hummingbot to allow traders to plug into Zaros’s decentralized liquidity source, benefiting from DeFi’s self-custody and composability features. Zaros is working on a new funding module similar to traditional exchanges to attract additional liquidity.
  • Se from dYdX discusses the importance of having a wide pool of liquidity providers. Despite some challenges in transitioning market makers from their previous dYdX v3 version to v4, dYdX sees incentives as a key driver for market maker participation. He highlights that when there is a profitable opportunity, market makers are motivated to overcome compliance and risk hurdles. The focus is on aligning incentives across liquidity providers and traders, which could involve token rewards, extra yields, or other mechanisms to encourage participation.
  • Vivaldi from Cadence shares their approach to incentivizing solvers, treating them as crucial as customers. Cadence has a permissionless onboarding process for solvers, requiring them to stake assets and receive token rewards. Solvers gain a higher trust score based on their staking, length of good trades, and successful executions, which gamifies and motivates their participation. This system helps lower fees for users as more solvers join, and solvers can set higher fees for executing trades on obscure chains, creating a competitive and dynamic market.
  • Sehaj from Avantis mentions that they chose to focus on Base L2, leveraging Coinbase’s distribution capabilities to attract more users on-chain. They aim to list unique assets not typically found on centralized exchanges and offer novel incentives like loss protection to encourage trading. This mechanism provides guaranteed rebates to traders on the non-skewed side, fostering arbitrage opportunities and enhancing liquidity.

Attracting Participation and Enhancing User Experience

  • Kirk comments on the importance of addressing liquidity fragmentation and asks about strategies for incentivizing solvers and market makers to participate in decentralized exchanges.
  • Vivaldi from Cadence highlights the importance of allowing solvers to charge higher fees for obscure or riskier trades, thus incentivizing them to take on these challenges. He highlights their permissionless onboarding process for solvers, where solvers stake assets and receive token rewards, contributing to a gamified and competitive environment.
  • Sehaj from Avantis discusses their reliance on trustworthy oracles and the importance of understanding market nuances to avoid blowing up. They have a risk team to evaluate assets and plan to bring market makers on board to balance skews and improve fee competitiveness. This approach ensures better trading conditions and efficiency.
  • Kirk then asks about strategies for attracting traders to the platforms.
  • Pedro from Zaros highlights the importance of a fair and efficient price marketing system, especially for AMM-based models. Competitive fees and a seamless onboarding experience are crucial for attracting traders. Pedro highlights that the first user experience is vital to retaining traders.
  • Se from dYdX shares their approach of iterating on the product and creating a platform where users can trade anything in a decentralized way. They plan to introduce Permissionless Markets, allowing users to create and trade markets with an Oracle source. This initiative aims to support a wide range of trading options, from crypto assets to sports betting, and make the platform a one-stop shop for traders.
  • Sehaj from Avantis underscores the importance of trustworthy oracles and having a dedicated risk team to evaluate each asset independently. They focus on balancing skews and improving fee competitiveness, making the platform attractive to both market makers and traders.
  • Vivaldi explains that Cadence benefits from the strong competition in the perp market, which drives better models that they can integrate. Cadence focuses on offering users the best and cheapest trades across all protocols on any chain while simplifying the user experience by handling complexities such as gas fees and chain management.
  • Kirk asks Sehaj from Avantis about market making, especially for less popular assets. Sehaj explains that they require reliable oracles to list markets and emphasize not blowing up by understanding market nuances. They have a risk team evaluating assets independently and plan to onboard market makers to balance skews and improve fee competitiveness. This will help attract traders by offering better trading conditions.

Closing Thoughts

  • Pedro from Zaros expresses excitement about the advancements in Ethereum scaling, new Defi primitives, and web2 adoption. He looks forward to seeing how these developments will improve the user experience and attract more users to Defi.
  • Se from dYdX is excited about creating a decentralized exchange that allows users to trade any asset. He highlights the importance of giving people the freedom to trade without restrictions from centralized entities.
  • Vivaldi from Cadence is excited about expanding their infra layer beyond perps to include dynamic yield generation and other systems. He looks forward to integrating with other platforms and improving the overall user experience.
  • Sehaj from Avantis mentions three key areas of excitement: their on-chain summer campaign with rewards for traders, the launch of their novel point and XP system, and upcoming integrations like Coinbase Smart Wallet, which allows users to log in with touch or face ID and create a smart contract wallet.

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Show Information

  • Medium: Twitter (Audio)
  • Show: Revelo Intel Twitter Space
  • Show Title: Revelo Roundtable #16 – Perps Part 3
  • Show Date: June 6, 2024