Basics

Shield’s Perpetual Option is a new financial tool that offers long-term, on-chain options without the hassle, risk, or cost of rolling positions. It is the perfect trading solution for all market conditions.

Key Features

Zero Slippage: Shield uses an oracle for price feeds, which minimizes price discrepancies and reduces the opportunity for arbitrage traders, leading to lower impermanent loss.

No Liquidation Risk: Each private pool has its own wallet, allowing the risk of each pool to be calculated and hedged accordingly. Private pools take on most of the counter-party risk, leaving limited risk for the public pool.

High Leverage: The P2DP model allows both public and private pools to provide liquidity for trades, with private pools offering 5x leverage and public pools offering 2.5x leverage, improving capital efficiency and trade depth.

Limited Downside, Unlimited Upside: The maximum trading loss is the daily funding fee, while profits are calculated as (No. Of Contracts*Price Change) - Funding Fee. Funding fees are known at the start of positions, and profits are unlimited depending on market conditions.

Core Innovations

On-chain Perpetual Options Pricing: Using stochastic processes, volatility, and partial differential equations, Shield calculates the exact solution for perpetual option funding fees and implements it on-chain with a linear computation approximation that has a 5% error rate after extensive data back-testing.

Peer to Dual Pools: P2DP eliminates LP counterparty risk by introducing private pools for professional market makers and public pools for regular users, ensuring on-chain liquidity and minimal risk for regular users.

Third-party Liquidator and Brokerage Systems: Shield uses non-cooperative game theory to design a third-party liquidator system and a brokerage system with a buy-back and burn mechanism, leading to a perfect decentralized network.

On-chain Random Matching Engine: Shield introduces the first on-chain random order-taking algorithm, where orders are assigned to private pools using hash of the block, block time, and private pool length, ensuring availability and fairness.