Derivatives platform Aevo plans to open up its Ethereum-based suite to support other protocols in an effort to expand its ecosystem.
“The key angle here is that we are currently built on our own package, but Aevo Exchange is currently the only app in this package,” Ribbon Finance RBN -4.94% co-founder Julian Koh told The Block. “Our plan is actually to open this up to others [developers] and build an ecosystem around our exchange.”
Aevo is a platform for trading options and derivatives. It runs on its own rollup, a Layer 2 network built using the OP Stack and running on top of the Ethereum blockchain. The platform is also switching in the short term to use Celestia to store some of its transaction data to save costs.
Looking for growth
Expanding the update is part of a roadmap that Koh said will be unveiled at X in the coming weeks. He noted at X that the project will take an aggressive approach when it comes to growth.
Ribbon Finance, a protocol built around vaults, originally launched Aevo as a separate platform, but decided to merge the projects under the Aevo brand in July 2023. As part of the rebrand, an Aevo token will be launched, with RBN token holders being migrated at a 1:1 exchange rate.
After the rebrand, Aevo plans to introduce an incentive program with the aim of increasing the platform’s metrics, Koh said.
Aevo has already experienced steady growth in recent months. It has reached nearly $50 million in value captured in its smart contracts and is currently seeing around $640 million in weekly volume, according to DefiLlama.
Koh attributes this in part to the platform’s yield-bearing balances. When a user deposits their crypto to the platform, it is sent to MakerDAO to generate yield. The user is given a derivative token to trade on the Aevo platform, which he can exchange for the underlying assets. This allows traders to see how their capital is generating returns as they use it for trading.
Aevo plans to continue offering returns, following the example of Ribbon Finance. In the first quarter of this year, it hopes to launch return strategies, which will allow the platform’s users to place their crypto in various setups designed to generate returns. With these strategies, the tokens become locked and unavailable for trading.
Offering pre-launch markets for upcoming tokens
A key focus for Aevo that may have helped drive demand is offering tokens for pre-launch trading. This is where a token is known to be on its way soon, often in the form of an airdrop, and usually the recipients know in advance what their expected allocation is. By supporting pre-launch trading, traders can hedge against their airdrops or try to lock in certain prices.
“I think every subsequent pre-launch marketplace that we’ve launched has gotten more and more traction, more users, more attention, and just more general interest in trading them. So I think every time we’ve launched a new pre-launch marketplace launch, is a strong market match. -launch market because [they generate] There is a lot of attention and people want to speculate about these things before they go live,” Koh said.
He added that some projects could start at multi-billion dollar valuations, creating opportunities for those who want to speculate in advance about what the market will look like. He noted that Jupiter was the biggest example of this, with its pre-launch valuation rising from $1 billion to highs of $8 billion. “We try to target the most hyped airdrops or the most hyped token launches,” he said.
Although such trading accounts for only a small percentage of the exchange’s volume, Koh said these markets generate a lot of attention and help attract new traders to his platform.
As for the recent launches of spot bitcoin ETFs in the US, Koh said this does not have any particular impact on the decentralized exchange space at the moment, as the latter’s volumes are small compared to centralized exchanges. He said the ETFs will allow some institutions to gain exposure to crypto, but they never came to DeFi anyway. Instead, he said the way to find growth will be by encouraging crypto traders to use centralized exchanges to try out their decentralized counterparts – something the incentive program will focus on.