Leverj is a hybrid exchange for derivatives trading that features on-chain trade settlement, centralized order matching, a platform with sophisticated trading tools, and a collateralized prediction market.
In Leverj’s view, traditional derivatives trading is heavily regulated, censored, and costs too much. Other decentralized exchanges (DEXs) have attempted to address these problems, but typically have not focused on derivatives trading, or have not addressed issues of counterparty risk, account security, identity protection, exchange centralization or exchange stability to Leverj’s satisfaction. This perspective on the industry’s and competitors’ shortcomings informs Leverj’s protocol and platform design, which features on-chain trade settlement, centralized order matching, a platform with sophisticated trading tools, and a collateralized prediction market that uses a centralized oracle. Leverj’s co-founders, Bharath Rao and Nirmal Gupta, also founded Cryptin.io, which offers financial institutions cryptographic auditing and security products, and have previous software development experience at GE Digital, Goldman Sachs, JP Morgan, and Lehman Brothers. Leverj launched via a token sale that concluded December 2017, raising $13 million dollars.
Leverj’s three core products are a hybrid derivatives exchange, a trading platform with sophisticated tools, and a collateralized prediction market. Leverj takes a hybrid approach to derivatives trading, decentralizing security critical features like trade settlement by implementing them through smart contracts, while optimizing for speed and affordability by matching orders off-chain through a centralized exchange. On-chain Custody contracts are designed to hold funds that only the user can deposit or withdraw from. All authentication uses public/private keys, not passwords, and user keys are never sent across the network. This helps prevent heist attacks on funds, while multiple variants of skimming attacks—attacks where small amounts of user funds are taken over long duration—are mitigated by protocol security measures that track order IDs and rejecting duplicates, provide proof of cancelation, and provide proof of price-time priority.
Leverj’s derivative trading platform attempts to reduce counterparty and custodial risks by using decentralized identity for authentication, signatures, and messaging. The platform allows for automated trade management, supports price action entries, facilitates skill development through self-recording and subscription based mentoring, for compensated real-time ‘duplication’ of experienced traders actions, trading strategy simulation, collecting and replaying historical data, and marketplaces for indicators. ETH/USD inverse futures will be the platforms initial primary offering, though Leverj hopes to offer futures on any stable, well-developed market.
Leverj is also developing a collateralized prediction market, dubbed LevPredict. The purpose of the market is to facilitate price discovery through the free trade of assets representing possible outcomes of specific events. Market participants put ETH as collateral into a smart contract, and the contract generates a pair of outcome tokens, each representing one possible outcome of an upcoming event. When the event in question occurs, the smart contract pays those holding tokens representing the actual event outcome one ETH per token, while tokens representing merely possible event outcomes become worthless. Prior to the event’s occurrence, the price an outcome token is trading at is considered indicative of that outcome’s probability. Trusted outcome resolution is a key component to such prediction markets, as smart contracts require an oracle source to know how to resolve a market. Leverj plans on determining outcomes in a centralized manner, and qualifies that the markets will not be decentralized in all respects.
Leverj uses a two token system designed to create liquidity while incentivizing network growth through attracting service providers. Leverj’s first token, LEV, confers holders access rights, allowing them to freely transact on the platform in proportion to the percent of total token supply owned. LEV can also be locked into a smart contract so to generate FEE, a secondary tradable token used to pay fees, effectively allowing LEV holders to transfer and monetize their rights to platform use. The exact quantity of FEE generated is a function of the lock duration period and FEE price stabilization mechanisms. Generating FEE this way is intended to help to keep the token’s price stable and fairly compensate LEV holders for locking access rights. LEV and FEE are ERC-20 tokens.