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In mild of all the hype round real-world property (RWAs) of late, I believed it’d be attention-grabbing to look at Ostium.
Ostium is a perps DEX on Arbitrum that permits you to commerce RWAs onchain. It’s not a brand new challenge: The workforce raised $3.5 million in a spherical led by Normal Catalyst and LocalGlobe in October 2023, and went reside final 12 months.
What’s new, nonetheless, is its recently-launched factors program, which has propelled TVL up tenfold from $5.5 million to $53.6 million.
What units Ostium aside from competitor perps DEXs is its capability to lengthy or quick widespread market indices (S&P500, Nikkei 225, Dow), commodities (gold, silver, copper, crude oil) or foreign exchange (GBP, EUR, JYP) – with as much as 100-200x leverage.
In contrast to tokenized RWAs, tradable property on Ostium are artificial property, so that they’re not really backed by precise collateral. As an alternative, asset costs are tracked by oracles. A custom-made pull-based oracle system was constructed for RWAs, and Chainlink Information Streams are used for crypto property.
Regardless of its RWA area of interest, actively-traded property on Ostium are usually assorted. On its highest buying and selling quantity day (April 16), crypto property fashioned the largest share of property traded (53%), overseas change was 22%, commodities was 18%, and indices was 7%.
In the final seven days, Ostium has generated $938 million in buying and selling quantity, which interprets to about $411k in charges. For context, complete buying and selling quantity on all Arbitrum DEXs was ~$3.6 billion in the final seven days, primarily based on DefiLlama.
Is Ostium the next Hyperliquid?
Each started as perps DEXs on Arbitrum. However right here’s the place they differ.
Ostium makes use of a two-tiered liquidity layer structure consisting of a “liquidity buffer” and a market making vault.
This market making vault works much like Hyperliquid’s HLP vault, the place the relationship between liquidity suppliers and the platform’s merchants is of an adversarial nature, i.e. if merchants win, LPs lose and vice versa.
(That is the similar vault that Hyperliquid just lately, controversially bailed out in the JELLYJELLY memecoin debacle.)
Ostium’s two-tiered design, nonetheless, is supposed to thwart this zero-sum relationship. Its “liquidity buffer” permits LPs to learn from progress in buying and selling quantity and open curiosity as an alternative of solely dealer losses. This fashion, Ostium LPs and merchants are in a win-win relationship (see docs for a fuller clarification).
Ostium’s OLP vault is presently providing an above common 28.69% APY on USDC deposits to compensate for the danger of LPs doubtlessly having to behave as a counterparty.
The second key distinction in protocol design lies in Ostium’s rejection of a central restrict orderbook (CLOB) design, popularized by perps DEXs like dYdX and Hyperliquid. That is most likely as a result of the incontrovertible fact that Ostium doesn’t exist by itself L1 protocol, however I could also be incorrect.
As an alternative, Ostium opts for a pool-based design. This design solves the apparent downside of liquidity fragmentation and mirrors the worth of RWAs offchain utilizing oracles.
Ostium is an thrilling challenge, but it surely’s nonetheless early days for the DEX when it comes to buying and selling exercise. I’ve heard it described as the next Hyperliquid poised to journey the tailwinds of the burgeoning RWA narrative. That’s a neat psychological mannequin, however whether or not or not crypto merchants wish to abandon conventional exchanges to commerce commodities and foreign exchange onchain is a complete different story.
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