Strips evolving into v2
After the first two months of beta launch on mainnet, Strips was able to collect a vast amount of feedback from various market participants. During our beta mainnet operations, the team realised the importance of evolving the whole project, which is why we are embarking on the next iteration of Strips Finance, with our V2 product development.
Why is v2 critical?
During our mainnet beta, the Strips team was able to collect market feedback to our V1 product, and understand the strengths and weaknesses of the current product offering. Before we can make interest rates available as an independently tradable asset via interest rate swaps, the first urgent problem that needed to be addressed is an efficient and transparent market for lenders and borrowers to meet and borrow at a fixed rate across different time frames. This is what is often coined as the “term structure” of lending markets.
We realise the current term structure of perpetual IRS as well as the market settings on lending rate and funding rate does not resolve the problem we identified. Resolving this problem will allow Strips to build derivatives on top of a fixed term structure .
What will be the major upgrades v2 will likely be covering?
Fixed-Term Interest Rate Swaps: our current perpetual rate swaps do not have an expiration and are great for speculators and traders. However, they are not an ideal tool for hedging interest rate cash flows. For borrowers and lenders that want to use Strips to hedge their interest obligations or income from variable rates to fixed rates our fixed-term interest rate products will let you accomplish this.
Strips v2 will enable active market making: the AMM is a powerful DeFi primitive and has served DeFi well as the market-maker of choice. However, for high-volume, high-information markets that want to be as efficient and flexible with liquidity as possible, order books are the superior model. DeFi will need scalable market making to support institutional-tier volume, and that’s what we intend to provide. As we get closer to the launch of v2 more detail will come on the mechanics of the Strips orderbook.
Strips v2 will also enable single-sided STRP staking: we are likely to replace LP staking to avoid impermanent loss problems on LP tokens. This will also increase the overall robustness of the Strips Finance system.
Strips and ZK rollups: We will be one of the very first derivative DEX’s to use ZK rollup L2 technology. ZK rollups share all the security benefits of Ethereum L1 while benefiting from significantly higher throughput and extremely cheap transaction costs. In addition, ZK rollup transactions are cryptographically guaranteed to be valid, with no 7-day delays in L2-to-L1 proofs on Ethereum main chain.
What do we need from the community?
We will resume the whole market soon, and we encourage people to close down their open positions and unstake from AMM and insurance.
In the near future, we will increase the trading fee, while also reducing the trading and staking rewards, so traders and stakers are not recommended to actively interact with the protocol until we release the v2. Once we find there are no more active open positions, we reserve the optionality to suspend the whole market for which people cannot trade and stake, but still take the time to unstake from the market.
While we are diligently working on Strips v2, we would kindly ask the support from our community to hold the tokens before v2 is released, and the STRP token holders will be given the first look of our upcoming product and any benefits related to the upcoming products.
During the transition from Strips v1 to v2, your assets are all 100% secure and the team will always be available if you require any assistance regarding your Strips account.
