Flare Announces the World's First Compliance-Compatible Decentralized Futures Protocol: XDFi

Flare Network unveils XDFi in partnership with Sindric Solutions, marking a monumental step in DeFi with the launch of the first compliance-compatible decentralized futures protocol.

Designed by Wall Street veterans, XDFi promises to transform futures trading by ensuring regulatory compliance, leveraging Flare’s ecosystem, and initially supporting BTC and ETH contracts, setting the stage for a new era in digital and traditional asset trading.

Flare Partners with Sindric Solutions to Launch XDFi

Flare Network (FLR) announced on February 21, 2024, in partnership with Sindric Solutions, the launch of the world's first compliance-compatible decentralized futures protocol, XDFi.

Sindric Solutions has been developing execution engines for major Wall Street firms for over 25 years and has built the world's largest trading engines for renowned companies such as Merrill Lynch, Fidelity, Goldman Sachs, and Morgan Stanley.

With the launch of the XDFi protocol, Sindric Solutions joins the already extensive list of major companies participating in the Flare ecosystem.

What is XDFi?

XDFi is described as the world's first compliance-compatible decentralized futures protocol, crafted by Wall Street veterans.

Compliance-Compatible Decentralized Futures Protocol

This decentralized futures protocol aims to raise the industry standards for compliance and efficiency, offering a reliable, non-repudiable futures trading environment that operates 24/7/365.

In the world of Decentralized Finance (DeFi), regulatory opacity has been a barrier to institutional investors.

XDFi guarantees 100% compliance in the purchasing of futures contracts through a mechanism known as KYCT (Know Your Customer Tokenization), ensuring that all P2P transactions for long and short positions are conducted only between eligible parties.

According to official announcements, this KYCT approach is a first for DeFi, guaranteeing full compliance without the need for centralized intermediaries, brokers, or custodians.

Custom API Integration and Leveraging Flare

The futures protocol utilizes custom API integration, with Flare being used by third-party compliance service providers for end-to-end on-chain tokenization and compliance tracking.

Users can fully manage the deposit of unsettled orders through a non-custodial framework, boasting a fully decentralized settlement system combined with a cloud-based best pricing matching algorithm.

This combination is used for matching buyers of futures contracts, facilitating long and short positions without intermediaries. Settlement of contracts based on Flare's FTSO price oracle revolutionizes the way derivative contracts are conducted on the blockchain.

At the core of XDFi is a futures market driven by the Flare Time Series Oracle (FTSO), with contracts being purchased and settled every 24 hours.

This feature, in conjunction with an optimized cloud routing algorithm, supports on-chain limit and market orders for peer-to-peer futures contracts, representing a significant leap for DeFi products.

Initial Support for BTC and ETH Futures Contracts

Initially, XDFi will support futures contracts for Bitcoin (BTC) and Ethereum (ETH), with plans to quickly expand to other FTSO-supported digital assets (such as XRP, DOGE) and traditional commodities (such as WTI crude oil, natural gas, corn, gold, silver, copper).

Core Philosophy: Participation and Rewards for the Community

The core philosophy of XDFi revolves around "participation and rewards for the community."

This is reflected in the fee-sharing mechanism that rewards referrers based on the contract purchasing activity of community members and their referrals, and in the "tick ratio," which offers a purchase-weighted voice in setting the tick ratio.

The tick ratio, a concept used in traditional futures markets, sets the settlement amount of contracts as a function of the underlying asset's price fluctuations.

Through these initiatives, Sindric Solutions aims to incentivize community participation and foster a sense of ownership among users.

As the protocol gains popularity and users become more experienced with its trading mechanisms, the distribution of fees and governance initiatives are expected to solidify XDFi's position as a leader shaping the future of DeFi.

Prior to the launch of its mainnet, the protocol will debut on Flare's testnet, Coston2, allowing users to participate in an interactive environment, provide feedback, and gain valuable insights.