Primex Finance is a decentralized finance protocol for digital assets, which enables DEX-agnostic cross-margin trading with scoring systems.
DeFi is one of the most successful areas of blockchain-based products. The current problem with DeFi is the lack of trusted sources for lending and stable cross-chain interoperability.
What is Primex Finance?
The Primex Finance protocol functions similarly to traditional decentralized lending platforms by facilitating trustless loan operations. This means that investors can easily lend assets to third parties without having to know to trust the other. Borrowers, on the other hand, can take advantage of these funds to partake in cross-DEX cross-margin trading.
However, traditional DeFi lending platforms require those borrowing assets to overcollateralize, which can make them highly inconvenient for some users. Primex Finance addresses this issue in two manners: First, loans are issued as a means to open margin trading positions in Decentralised Exchanges (DEXs). Second, the protocol only requires the locking of the deposit in a smart contract instead of transferring it to an external wallet.
This approach allows borrowers to easily open a position across multiple DEXs, amplifying the potential of their investment. While leveraging has been available in the world of Centralized Exchanges for years, this functionality is new to the DeFi ecosystem.
Primex Finance also brings several benefits to those lending funds. As profitable margin trading generates greater returns than other investments, profit sharing in the protocol is much more beneficial to all parties. This means that not only do borrowers also generate more earnings but lenders also receive higher interest rates when providing liquidity.
As the assets locked in Primex Finance are not transferred out of the protocol, the security of the funds is increased. In case of liquidation of a loan, the funds are automatically moved to the protocols TVL This, in addition to the use of AI-based trader scoring, ensures that traders with high scores have priority over other traders.
As traders with high scores are more likely to generate bigger gains for themselves and the ecosystem, the protocol’s TVL will tend to increase. By doing this, Primex Finance not only promotes fair play between lenders and borrowers but also organic growth: If a user wins, all the ecosystem wins with them.
Limit Risk Without Limiting Rewards
With Primex, lenders can select from a variety of risk profiles to allocate their assets at the exact risk they desire. They may also rate traders with a good reputation and have adopted dynamic risk profiling since they want to protect their assets with such traders.
Allowing for the selection of a risk profile implies a range of interest rates, including higher rates for risk-averse lenders.
Consequently, traders benefit from leveraged trading by making more money. Profits are transferred to the credit pool, and Primex combines profit sharing with lenders, increasing the lender’s profits above and beyond standard interest income.
The protocol provides several key features including Cross-DEX cross-margin trading, portfolio management for assets, trading pairs, and traders, margin trading fees and profits supporting yield farming operations, the seamless bridge between a large number of DEXs, and leveraged trading across multiple chains.
Mission and Team
Primex was founded with a simple goal in mind: to combine DEXs and lending, the two key use cases of DeFi, into a single platform, optimize swaps across multiple ecosystems, and provide the greatest user experience possible.
The group developed a decentralized margin trading protocol that combines these two DeFi pillars into a single ecosystem.
Vlad Kostanda and Dmitry Tolok are members of Primex’s founding team.
The two talents have been working on the original project Adoriasoft, a blockchain development services, and solution firm, for four years.
Adoriasoft’s CEO was Vlad, while Dmitry was in charge of the company’s commercial development projects. They worked together on several projects at Adoriasoft until launching Primex in 2021.
Previous cooperation experience provides the team with strong and diverse expertise in cryptography and information security. In addition, the team worked closely with well-known ecosystems like Polkadot, Cosmos, and others.
Cross-DEX cross-margin trading
Blockchain in general, and DeFi in particular, are transforming the way we live today. The technology transfers the entire centralized operational model to the blockchain platform.
From there, it helps to address the shortcomings of existing centralized approaches, such as centralization, high costs, and transaction times.
However, without cross-chain interoperability, DeFi will likely remain in its infant stage for the foreseeable future. Consider each blockchain to be its own economy.
If these economies cannot cooperate, the entire ecosystem will not be able to thrive and take over the traditional financial sector.
The amount of money pouring into DeFi protocols is increasing day by day, signaling that the world of DeFi is heating up. Cross-DEX cross-margin trading simplifies and accelerates communication between DEXs.
Primex pursues cross-chain technology based on this perspective.
The protocol isn’t restricted to a particular DEX.
Traders can open leveraged positions on different DEXs, and the position can be opened on one and closed on another, depending on a variety of circumstances, including the amount of liquidity available in the relevant pair.
Risk management for assets, trading pairs, and traders
A proper risk management system is one of the keys to success in the cryptocurrency market because of its high volatility. Lenders can diversify their risk across multiple assets, specific traders, and so-called risk buckets as a way to minimize the possibility of losses.
A risk bucket is a smart contract that has a set of trading rules that have been established by a community-nominated risk notary in order to make risk management easier for lenders.
Yield farming backed by margin trading performance
Profitable trading creates in turn significantly higher earnings, resulting in traders paying more fees to the protocol as a result of the profit-sharing mechanism. In comparison to alternative lending protocols, lenders will earn a higher rate of interest with Primex.
AI-based trader scoring
A decentralized network of AI-based nodes regularly evaluates traders’ performance.
The scoring system determines the risk levels of traders and the buckets that are available. High-scoring traders can endure periods of high volatility and maintain their positions even when their positions are close to the liquidation value.
No collateral to open a position
Instead of requiring you to put up collateral, Primex allows you to start a trade simply by locking in a deposit.
Neither funds nor locked assets are moved to external wallets under any circumstances. They are transferred to a protocol TVL in case of liquidation.
Traders do not access their personal wallets to connect with DEXs; instead, they use smart contracts within the protocol.
Fixed interest rate for lenders
Lenders have the opportunity to fix their interest rates if they lock in funds for a specific period of time. Backed by trading fees, a fixed interest rate is not affected by fluctuations in market interest rates.
Staking is the most prominent scenario of token usage. Notaries are elected by token holders through a stake-based voting system. The number of platform tokens held by an account determines a token holder’s voting power, also known as voting weight.
A notary must demonstrate commitment by depositing funds into a time-locked safe account (forfeited in the event of malicious activity) while performing their tasks, which appears to be a variation version of DPoS.
- Team and advisors: 21%
- Inflation: 10%
- Treasury: 11%
- Community: 35%
- Strategic investors: 23%
Users can place bets on notary groups rather than individual notaries. Voting for bucket notaries and trader notaries are generally performed in the same way, though there may be some variances.
To achieve consensus, the approach uses real-time voting in conjunction with a social reputation system. It is the least centralized consensus protocol among the others. Each token holder has a degree of control over what happens on the network.
The token is a reward for notaries, and its value is determined by the efficiency of the credit buckets in use. Primex employs token-based protocol governance mechanisms that enable the configuration of a variety of system variables.