3 reasons why Potion’s “aggressive decentralisation” is changing the DeFi game

Published in Cryptodaily.co.uk

Below we review a new and exciting project from PotionLabs. It’s made up of three key components: a protocol, a suite of analytic tools, and an intriguing launch mechanism. We’ll go through each in turn, highlighting the key features and the ways each one is changing the DeFi game.

Potion Protocol

Key features

1. A new, powerful risk management layer in DeFi that offers products like insurance from an automated market maker (AMM)
2. A one-of-a-kind bonding curve that prices any asset depending on the LP’s risk
3. A decentralised order book that allows LPs to specify their independent pricing and a router that automatically find traders the lowest LP offers in the network

How this changes the DeFi game

1. Addresses one of the greatest challenges of existing price insurance solutions: the severe risk in long-term liquidity supply that exposes LPs to extreme capital losses
2. Intuitive UX that lets both unsophisticated and seasoned traders access a broader range of price insurance products in deeper marketplacers
3. A democratised approach to risk management that changes the current status quo

Potion Analytics

Key features

1. A comprehensive set of interactive tools with sophisticated risk analytics and simulation capabilities
2. Risk optimization through the Kelly Optimization criterion
3. Sustainable and programmable alpha through a backtesting layer

How this changes the DeFi game

1. A new class of services built from the ground up by the community for the community
2. Radically new technology aimed at helping users in DeFi manage the risk of their assets in a simple and reliable way
3. DeFi 2.0: extremely sophisticated on the backend, surprisingly simple on the frontend

Potion Unlock

Key features

1. A launch mechanism to release the Potion Protocol into the public domain through a novel NFT game that requires players to work together to unlock an encrypted password.
2. Totally open-ended: players will have to self-coordinate — without the input of PotionLabs — to find their own solution to the problem.
3. NFTs can be purchased by the public at a Dutch-style auction on the 14th March 2022. Others have already been distributed to founding members and via a $12m private sale.

How this changes the DeFi game

1. Revolutionary approach to software release that maximises community involvement whilst avoiding the regulatory dangers of a traditional project launch
2. True “aggressive decentralisation” (not just a decentralised gloss on a centralised project) — a community with ‘skin in the game’ has the power and stewardship over the future of the protocol
3. Meticulously designed NFTs that prove they can be not just keys, but art in their own right — a unique collection of metaverse identifies that resonate with DeFi enthusiasts

Summary

Potion Protocol is a next-gen dApp for risk management that presents a unique approach to decentralised finance. It comes with Potion Analytics, a complex but accessible system of rewarding LPs. Furthermore, it uses an on-chain game called Potion Unlock to bootstrap a decentralised community interested in releasing the Potion Protocol’s codebase into the public domain.

Conclusion: Get involved!

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