Table of Contents
- A Strategic Partnership For Financial Innovation
- A Look At Overlay's Mechanism
- What Is Overlay Offering Its UserBase?
Overlay Protocol is launching its beta version on the mainnet in May 2021 and has raised $2.215Million to develop the protocol in its initial bootstrapping phase.
They shared the news on Twitter with a link to their medium post, saying,
"We're excited to finally come out of stealth mode and share what we've been building + who we've been building with! Link @OverlayProtocol enables you to long or short DeFi data streams with leverage without the need for individual counterparties. We're proud to have @polychain, @1kxnetwork, @paraficapital, @TheLAOOfficial, and @VENTURE_DAO onboard as our investors."
Overlay is a protocol for trading nearly any data stream, long or short, with leverage, using price oracles and a native token (OVL).
A Strategic Partnership For Financial Innovation
Overlay won the Chainlink award at ETHGlobal late last year and had been quiet until their investor announcement. However, they did manage to build a small but active community on Twitter over the past few months as they were busy working on their fundraiser.
Overlay has optimized an investor group that will serve as active governance participants, protocol users, and advisors on crypto-economics and protocol design in this round.
The team stated in their medium post saying,
"Beyond sufficient runway for development, we also wanted to diversify OVL amongst strategic investors who are committed to helping us bootstrap Overlay and play an active role in protocol governance over the long haul."
The stakeholders include Polychain Capital, 1kx, ParaFi Capital, The LAO, MetaCartel Ventures, and
Ben Middleton. Jacob Phillips, Crypto Researcher at Polychain Capital, said,
"Overlay sits at the intersection of DeFi derivatives, prediction markets, and automated on-chain market making — three of the most exciting opportunities in DeFi today. Overlay will unlock much-needed liquidity for synthetic exposure to DeFi assets and will enable the creation of entirely-new markets that couldn't have existed outside of crypto, making it a powerful primitive for financial innovation."
A Look At Overlay's Mechanism
Overlay protocol will be used for trading nearly any data stream, long or short, with leverage using price oracles and their native token $OVL. $OVL is not yet listed on Uniswap, SushiSwap, or any other exchange; the team will announce the launch on their social media channels.
Using Overlay, a trader can enter positions by locking $OVL in long or short positions on data streams offered by the protocol. These data streams are obtained through oracles that are manipulation-resistant. While exiting the position, the protocol will mint or burn $OVL based on the net profit or loss the trader makes as compensation, which will in the tokens' total existing supply.
Ben Forman, Founder and Managing Partner at ParaFi Capital stated,
"From the moment I met the Overlay team in early 2019, I became enamored by their vision for one-sided, scalar prediction markets. They are taking a creative and imaginative approach to building a trading platform for data streams. We couldn't be more excited to join their journey and support the evolution and growth of Overlay."
What Is Overlay Offering Its UserBase?
OVL token holders will be able to propose new markets and determine per-market risk parameters such as trading fees and maximum leverage levels. They will also be able to vote on unpredictable, non-manipulative on-chain data to become a tradable market.
The data can be anything from DeFi tokens, NFT indexes, political and natural markets, etc. DeFi users, especially users of nascent DeFi protocols, are exposed to the tokens' volatile price movements within illiquid markets. Overlay aims to solve this issue while also giving its users access to a multitude of new markets. Overlay will also launch a dedicated Snapshot page to enable the OVL community to signal immediate support for or against governance proposals.
Lasse Clausen, founding partner at 1kx, further added,
"Overlay solves the biggest challenge of derivatives, liquidity, in a completely novel way. By leveraging the unique abilities of blockchains and smart contracts it creates the 0 to 1 innovation that has the power to transform industries."
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.