MetalSwap is the first dApp in the history of DeFi to bring the derivative financial instrument of Swaps into the blockchain. This pioneering positioning gives MetalSwap an undisputed leadership role in this specific category of DeFi.
As the first dApp in this sector, it is also necessary for MetalSwap to focus on disseminating the knowledge about the basic function of the dApp, introducing users to the advantages and possibilities that using Hedging Swap DeFi positions can bring.
In today's article, we will try to clarify all doubts about our Hedging Contracts, aiming to explain all the fundamental concepts to know.
Introduction to the Hedging Contracts
The goal of MetalSwap is to make it possible to open positions that can remove the volatility of a specific asset for a specific period decided by the user.
This derivative financial instrument called Swap already exists in the traditional finance world and is extremely used in the commodities market, where the merchants need to ensure periods of volatility absence on their assets for logistical and security reasons.
MetalSwap makes it possible to open hedging positions within the blockchain through its RiskOff Hedging Contracts, which are currently available on the Ethereum and Optimism blockchains and have WBTC, ETH, WPAXG, OP as available assets.
Swap and Hedging Contracts
As mentioned, swaps are among the most commonly used derivative instruments in the traditional finance world, and MetalSwap, thanks to its characteristics of decentralization, security and efficiency linked to the blockchain structure, offers a better solution than those already present.
Initially, our tool was associated with the nomenclature “Hedging Swap”. However, the team noticed that the word "swap" created some confusion because this term, within DeFi, has taken on a completely different role, usually associated with decentralized exchanges.
So, it was time to change the payoff of our tool, which is now "RiskOff Hedging Contracts" to also refer to the underlying functionality guaranteed by smart contracts. This new nomenclature will help new users to quickly understand the aim of MetalSwap.
Even Vitalik Buterin, in the presentation speech of Ethereum in 2014, mentioned the idea of creating Hedging Contracts as one of the first possible use cases of the blockchain.
This change was also accompanied by a graphical refresh of the MetalSwap WebApp and landing page, which have now taken on a more appealing and easy-to-understand look.
In our upcoming article, we will explore the inner workings of MetalSwap's Hedging Contracts, taking a closer look at how they operate. Join us as we dive deeper into this fascinating topic and uncover the full potential of MetalSwap's innovative DeFi instrument.
-The DeFi Foundation
✎ What is MetalSwap?
MetalSwap is a decentralized platform that allows Hedging Swaps on financial markets with the aim of providing coverage to those who work with commodities and an investment opportunity for those who contribute to increase the shared liquidity of the project. Allowing the protection for an increasing number of operators.
With MetalSwap we enable hedge swap transactions through the use of Smart Contracts, AMM style.