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GAINS Associates

Structure Finance — Telegram AMA — August 19

On Thursday, August 19, we had the pleasure to welcome to our Telegram chat:

Nivel Egres, Founder.

We asked him questions about the development of Structure Finance.

Some sentences have been slightly edited for readability but the meaning has been conserved.

Summary

Structure Finance is a trading platform for users of all skill levels that specializes in structured financial products. Structured financial products combine the flexibility of derivatives with the simplicity of basic financial instruments to give retail traders exciting new options for speculation and risk management.

STF is the default currency in the Structure platforms. Users could use STF for transaction fees and also for purchasing option products. The transaction fees will be collected and contributed to the reserve, and further on allocated through decentralized governance.

Structure will integrate with decentralized oracle service providers to get external price data for the structured products. Structure will also support other DeFi protocols and receive price data directly from those platforms such as Uniswap.

STF will function as a governance token for the Structure platform. STF holders will collectively propose and vote on which assets to support, which protocols to integrate, fee ratios, use of reserve funds, and more.

Introduction

Q — Ayeley from GAINS: What did you do before crypto and did you have any other previous venture in crypto? What is your role at Structure Finance?

A — Nivel from Structure Finance: My background is in traditional finance, I was a structured products trader for many years — managed bank structured product books at Morgan Stanley, Citi Bank, and Nomura, then became a portfolio manager at Point72. Around 2014 I bought some bitcoin and realized that this is the future, so first I got involved in trading it and then came up with this project.

I am the founder and the key manager of the project.

About Structure Finance

Q — Ayeley from GAINS: What is the project about in a few simple sentences? For how long have you been working on Structure Finance?

A — Nivel from Structure Finance: Structure.Finance brings structured products to the crypto world. Structured financial products combine the flexibility of derivatives with the simplicity of basic financial instruments to give retail traders exciting new options for speculation and risk management.

We started the project about a year and a half ago, to bring the structured product framework to the crypto ecosystem, specifically DeFi. Of course, it took us a bit of work but here we are.

We have three founders and a development team. On the founder side, and Kent comes from traditional finance and has worked all over wall street. As I said, I’ve been a structured product trader for various banks and a portfolio manager for several large hedge funds. Kent has been a senior quant in Goldman and Fortress. Evelina, our Head Priestess, comes from a pure crypto background — she was part of the marketing team for Waves and was named in the top 10 women in crypto in 2017. So we have brawns, brains, and beauty :)

Q — Ayeley from GAINS: Can you walk us through how the average crypto user will use the Structure Finance platform.

A — Nivel from Structure Finance: Overall, the structured products offer a way to make “custom” bets by exchanging risk with other players in the market. We’re going to have several structured payoffs aimed at various user groups. For some of these payoffs, the general idea is that using these payoffs, a crypto user can make money in an environment where crypto is not moving — for example, a double no-touch is perfect when crypto is just crabbing sideways and nothing is happening. For others, they will be able to make cheap leveraged bets on a direction.

Q — Twitter user @ishrat9895: Reading your roadmap I saw something that got my attention: “knockout / knock-in barrier”, can you explain to us what you mean with this item? What’s the objective behind such words?

A — Nivel from Structure Finance: Knock-in and knock-out barrier options are like regular options, but with added “special levels”. In the case of the knock-out barrier, the option disappears if a specific price level is touched. In the case of the knock-in barrier, the option only gets activated if the specific price level is reached. Because these barrier features add uncertainty, these options are much cheaper than the regular ones and offer good leverage for the option buyers — for example, if you think USD-BTC will go up but not moon, you can buy a knock-out call for very cheap.

Q — Telegram user Susanti: Can you briefly explain how DNT option pricing works? And will people in the future be able to choose the period or payment they want for DNT?

A — Nivel from Structure Finance: The more volatile the USD-BTC is, the wider the boundaries are going to be. You have to figure out if boundaries are too wide (then the risk/reward is good) or too narrow (then you want to stay out). Very soon we are also coming out with a much shorter version of DnT that is going to be in force for 5 minutes. Of course, in the future, we are going to let the user pick the time frame.

Q — Telegram user 👽 Crypto Jiren 👽: At what expiry times can we make our predictions when trading within Structure Finance? Are minute or hour trades enabled?

A — Nivel from Structure Finance: Yeah, crypto is a fast-paced market! All of our products will be geared towards shorter-term horizons. In fact, the new iteration of the double-no-touch is going to be for 5 minutes and the volatility pool product is going to give the users yield based on 1-hour volatility.

Q — Telegram user CE MM: I understand that all of their products have a set risk and reward level. A bet is entered clearly understanding how much we can win or lose. But, these strategies are usually for professional traders. How do you educate users to use your services wisely or with basic strategies?

A — Nivel from Structure Finance: Good question! We understand that these products are more complex and need some explanation. So we are here to help — first, we are going to make educational videos and pages. We are also going to have a community channel where we are going to give product tutorials and where users can ask questions.

Token

Q — Ayeley from GAINS: What is the token use case and how does it capture the value of the ecosystem you’re building?

A — Nivel from Structure Finance: The platform supports STF as the native token to support platform incentives and decentralized governance. First and foremost, STF is the default currency in the Structure.finance platforms. Users could use STF for transaction fees and also for purchasing option products. The transaction fees will be collected and contributed to the reserve, and further on allocated through decentralized governance.

Secondly, the platform needs to have initial liquidity to enable the option products to have more accurate pricing and better profitability. However, providing liquidity at the initial stage might not be profitable. To encourage users to deposit assets and incentivize a positive feedback loop, there will be token incentives given in STF.

Finally, the token holders will collectively decide on the platform governance, in terms of fee ratio setup, payoffs, and different platform support.

Partnerships

Q — Twitter user @totominhchi: I read that Structure Finance will use Hedget infrastructure to issue trading products on the blockchain. So, what is the significance of this collaboration? Can you disclose to us the system updates that the Hedget team has been working on? What can we hope for?

A — Nivel from Structure Finance: The Hedget team is working on system updates that will expand the functionality of both the interface and API, so the two platforms can act together. These expanded functionalities will allow for several new features which are useful in structured financial products including short-term options, multi assets, and (last but not least) a built-in lending functionality.

Q — Telegram user Thomas: Elements of your roadmap include expansion to Huobi Eco-Chain and implementation of Chromia as a Layer-2 enhancement for Ethereum. How will you achieve seamless interoperability between the three chains that will make up Structure? Why have they chosen Chormia to do so?

A — Nivel from Structure Finance: There is limited bandwidth for Ethereum in terms of speed and cost, so Structure.Finance is also integrating with layer 2 protocols like Chromia to provide a better user experience for trading on Structure.Finance. I mean, it’s an obvious next step. Flexibility is increased and the costs are reduced by using a layer 2 solution. Chromia is a relational database model that is perfectly suited for the high turnover and throughput of a derivatives system. So while our products are chain-agnostic (and we plan to take community input on the chain deployment), we decided that Chromia was a perfect first candidate.

Finances

Q — Ayeley from GAINS: Did you raise funds so far? If so, how did you handle them? Are you planning to do any future raises?

A — Nivel from Structure Finance: We have gone through a round of seed and private financing a few months ago. At the moment, we do not need additional financing and are not planning any more fundraises.

Competitive Advantage

Q — Telegram user Thorm Thorm: What are the unique things that set Structure Finance apart from its competition?

A — Nivel from Structure Finance: The main thing is that it’s not a single product but rather a flexible platform that accommodates all types of structured products — the types that are found in traditional finance as well as new ones that will be unique to crypto space. Also, we are building the platform as a community project from the ground up. People can vote for new products and payoffs they want, while the founders have the technical background to implement and provide liquidity in these products. Also, the idea is that our platform will bring together people who want to buy structured products and people who want to serve as structured product issuers — the way we are building the protocol there are very few limitations in terms of the structure and we can very quickly push new ideas to the market.

Business Development

Q — Ayeley from GAINS: What stage is the project at? And what does the future hold for you?

A — Nivel from Structure Finance: The future holds great riches, of course!

For now, we have our DNT Demo live. Pretty easy concept — you get paid if USD/BTC stays in range for an hour — so if nothing happens, you win

You know, boredom is better than excitement :)

More formally, you get two boundaries (upper and lower) and if these boundaries are not touched, you get paid. At the start of the trade, you see these boundary prices and it’s up to the player to decide if they will be touched and the risk/reward is good. Check it out here.

In the near future, we are also getting ready to push out two more products: — the project token yield wrapper that would allow people who hold project tokens to write covered calls on them — dual pool volatility vault that would allow people to bet on short-dated volatility in ETH and WBTC.

Q — Twitter user @tuan_iker: Currently, most projects and platforms are in English. How will Structure reach non-English local communities? Do you have any plan for them to better understand your project?

A — Nivel from Structure Finance: Super important! We are trying to build a true communal project, so engaging non-English communities is key for us. We are going to partner with local social media groups who speak the language and understand the local specifics. Also (obviously) we will translate our user interfaces into as many languages as possible.

Thanks for coming into our community, Nivel, and taking the time to answer our questions. Anything else you’d like to say? Where can we follow you to stay updated? — Ayeley Commodore-Mensah from GAINS Associates 🐋

Was great to be here! Thank you all!

Website | Medium | Twitter | LinkedIn | Telegram Chat | Telegram Channel — Nivel Egres from Structure Finance

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