Moving towards decentralization: JOJO will implement ZK-proof for funding rates in partnership with Brevis.
The decentralization of the funding rate using zero-knowledge proofs represents a significant advancement for JOJO and the broader DeFi community. This innovative approach will help ensure price stability, market balance, and enhanced liquidity, ultimately benefiting all participants in the perpetual contract ecosystem.
1. What is a Funding Rate?
In perpetual contracts, the funding rate is vital for keeping the price of the perpetual futures contract in line with the underlying asset’s spot price. Unlike traditional futures contracts, perpetual contracts do not have an expiration date. Therefore, the funding rate is crucial for preventing significant deviations from the spot price.
The funding rate consists of two main components: the interest rate and the premium. The interest rate represents the cost of holding a position, while the premium is based on the difference between the perpetual contract’s price and the spot price. Both long and short traders pay or receive funding at regular intervals, encouraging them to align the contract price with the spot price.
2. Why is the Funding Rate Important for perpetual contract exchange?
Maintaining a fair and stable funding rate for decentralized exchanges (DEXs) that offer perpetual contracts is vital. A well-designed funding rate mechanism ensures:
- Price Stability: The funding rate encourages arbitrage opportunities, keeping the perpetual contract price close to the spot price and minimizing the risk of significant price discrepancies.
- Market Balance: It helps to balance long and short positions by incentivizing traders to take the opposite position when the market is skewed.
- Liquidity: A stable funding rate attracts more traders and liquidity providers, contributing to a more robust and active market.
Without an effective funding rate mechanism, a perpetual DEX could experience price distortions, reduced liquidity, and potential trader dissatisfaction, undermining the platform’s reliability and appeal.
3. Decentralizing Funding Rates with Zero-Knowledge Proofs
Calculating the funding rate is a complex and resource-intensive task that demands continuous monitoring of spot and perpetual contract prices. This makes standard on-chain computation a costly endeavor. In many existing solutions, funding rates are often calculated by centralized solutions, which leads to security and compliance concerns. Brevis offers cutting-edge Zero-Knowledge Proof technology that drastically slashes computational costs. With Brevis’ ZK technology, smart contracts can securely access blockchain states, transactions, and events from any time frame without any trust to anything other than the blockchain itself. This technology efficiently processes data of any size. Brevis significantly reduces the cost and time required to generate proofs as the volume increases with efficient proof aggregation technology.
JOJO is revolutionizing the decentralization of funding rate calculation by using Brevis’s ZK Coprocessor technology. Using Brevis’s SDK, JOJO creates a ZK proof based on on-chain perpetual trading and spot-price oracle data to calculate funding rates accurately. Subsequently, this proof is verified on-chain and utilized to adjust JOJO users’ funding rates.
JOJO boldly joins forces with Brevis to pioneer the introduction of funding rate zero-knowledge proofs (ZK proofs) in the DeFi ecosystem. This groundbreaking approach guarantees transparent and secure calculation and verification of funding rates while safeguarding user privacy. Implementing ZK proofs represents a significant industry advancement, elevating trust and integrity and establishing a new standard for decentralized perpetual DEXs.
About JOJO
JOJO is an orderbook decentralized perpetual contract trading platform with a hybrid liquidity model. This model offers high security alongside high leverage and transparency. JOJO allows users to trade 20+ cryptocurrencies with the lowest fees on the BASE and enjoy up to 1000X leverage.
JOJOs features
- Deep liquidity: All JOJO pairs have vast amounts of liquidity which allows traders to comfortably trade without having to worry about any external liquidity factors.
- Lowest fees: JOJO has the lowest fees, (Maker -0.01% / Taker 0.03%).
- Multi-collateral: Traders are able to use non-stablecoins and interest bearing assets as collateral.
- Cross margin: These cross capabilities allow for stronger risk resistance and lower the probability of liquidation.
- Sub-accounts: Multiple sub accounts allow traders to manage their funds easier.
- Smart contract order: Add script into an order, enabling other developers to freely create liquidity tools as desired.
Website | Twitter | Discord | Gitbook | Github | Farcaster
About Brevis
Brevis is a smart ZK coprocessor that empowers smart contracts to read the full historical on-chain data from any chain and run customizable computations in a completely trust-free way.
Brevis can trustlessly read the states, transactions, and receipts of any time frame. It efficiently runs computations on data of any size: as the data to be proved increases in size, Brevis significantly reduces the per-unit cost and time for proof generation. Additionally, Brevis seamlessly verifies Zero-Knowledge (ZK) proofs on any blockchain, providing a unified and trustless user experience for dApps. Brevis empowers data-rich use cases, including data-driven DeFi, user-segment optimized live-ops features, zkBridges, zkDID, and smart-contract native risk control, all executed in a trustless manner across multiple chains.
Dive Deeper into Brevis:
🌐Website | 🗨️Telegram | 🐦X | 🎮Demo | 📘SDK Docs
