Meet the innovative Polars platform that opens up a new DeFi concept to the prediction markets.
In order not to take up a lot of your precious time, in this article we will not deeply describe the market research, problems, solutions and other conceptual torments that we had to face when developing the Polars concept. We will write about this in separate articles, which will be available to those users who will have enough free time for this. In this article we will try to describe as briefly and intelligibly as possible the basic concept and ideas of the Polars platform.
Let’s summarize the basic concept of Polars as simply as possible in 10 points:
- There are two polar tokens.
The first polar tokens created on the Polars platform are BLACK and WHITE tokens. For the convenience of perceiving information, below we will use these polar tokens (BLACK and WHITE) as an example.
- These two polar tokens exist exclusively in pairs and have a specific aggregate value.
- If the WHITE token rises in price, then the BLACK token will fall in price by the same amount. Conversely, if the BLACK token rises in price, then the WHITE token will fall in price by the same amount. But it is important to note that their aggregate price will remain unchanged.
- No matter how the price of polar tokens changes to each other, their aggregate price always remains unchanged. Therefore, if a user owns the same amount of two polar tokens at once, the value of his assets remains unchanged. But if a user owns one of the two polar tokens, the value of his assets can either rise or fall.
- Which token will fall in price and which token will rise in price is influenced by the results of specific events from the real world. For example sports competitions, political confrontations, or exchange rates.
- Buying one of the polar tokens, the user makes a kind of bet on the victory of one of the warring parties.
- For ease of perception, and to increase the competitive spirit, we have introduced the concept of 2 polar opposing teams: White Team and Black Team. Within the framework of a specific competition, one of the opposing sides falls on the side of the White Team, and the second on the side of the Black Team.
- As part of a specific event that affects the price of polar tokens BLACK and WHITE, the standard volatility of tokens fluctuates within 5%. That is, if the White Team wins, the price of the WHITE token will increase by about 5%, and the price of the BLACK token will fall by the same amount.
- Every day, the price of specific polar tokens can be consistently influenced by from 5 to 15 events from the outside world, therefore, the price of polar tokens can change more than 10 times per day.
- Each subsequent event uses the prices of the polar tokens of the previous event as initial ones. Consequently, several consecutive victories by one of the teams will have a cumulative effect on the price of polar tokens, but their total value will remain unchanged.
Consequently, users buy, sell, exchange and hold polar tokens based on the predictions they make in relation to those events that affect the price of polar tokens.
For a maximum understanding of the mechanics of polar tokens, we propose to consider an illustrative example:
- Initial price of WHITE token: $0.56
- Initial price of BLACK token: $0.44
- Total price of polar tokens: $1
- Upcoming competition: Football, Champions League, Barcelona — Real Madrid.
- White Team — Barcelona, Black Team — Real Madrid.
- The assumed volatility is 5%.
- Let’s assume that the user predicts the victory of Real Madrid, the Black Team. The user buys BLACK tokens at the current price of $0.44.
- The event is happening, and indeed, the Real Madrid (the black team) won in this competition. The price of the Black token has grown by 5% to the level of $0.462, while the price of the White token has fallen by the same amount. But their aggregate price has remained unchanged.
- New WHITE price: $0.538
- BLACK new price: $0.462
- Aggregate price of polar tokens: $1
As we can see, the asset value of the user who bought BLACK tokens has grown and now he has several options for further actions:
- Sell BLACK tokens and fix the profit.
- Leave BLACK tokens if the user predicts the Black Team will win in the next event.
- Exchange existing BLACK tokens for WHITE tokens if the user predicts the White Team will win in the upcoming event.
- Buy cheaper WHITE tokens in addition to the existing BLACK tokens and become a market maker of the Polars platform on more favorable terms, earning from swap fees and income from farming
In fact, there are many more options for action and various strategies to increase efficiency than described above, but we will talk about them in our next articles.
As you can see, this polar tokens model solves one of the main problems of the prediction market — the lack of liquidity and trading volume. Within the framework of one pair of polar tokens, the interests of many user groups intersect at each moment of time, so the liquidity for buying and selling should presumably be more than enough to carry out impressive trading volumes on the platform.
Additionally, as part of the Polars concept, we have implemented quite a few mechanics that expand the opportunities for earning various groups of users. In addition to making money on forecasts, users will be able to earn as liquidity providers. Thanks to the unique secondary pool design, there are many profitable arbitrage opportunities due to the absence of slippage, and the risk of Impermanent Losses is eliminated for liquidity providers.
Users will be able to receive additional rewards in management tokens for carrying out various activities on the Polars platform: making a trading volume, making a trading volume by referrals, participating in voting on the platform, providing liquidity of polar tokens.
30% of all commission fees of the Polars platform are distributed among the Advanced Users. 20% of the fees are sent to the base pool, increasing the security of polar tokens, which increases their total value. The remaining 50% of commission fees are shared by liquidity providers. We will write about how the Polars platform is technically arranged in subsequent articles, within the framework of this article, our task is to analyse the basic concept of polar tokens.
Another important feature of Polars is multi-chain development. To begin with, we are launching the platform on the Ethereum network and Binance Smart Chain. Further, according to the plan, the platform is being deployed in the Polkadot network, as well as in other networks compatible with Ethereum EVM. This will allow users to choose a network in order to optimize commission fees and allocate liquidity according to the number of users and their activity in different networks.
The new DeFi platform for creating secure polar tokens, the price of which depends on the results of specific external events. Within the POLARS platform, users can buy, sell and exchange polar tokens, as well as participate in the distribution of the platform’s commission income.