In this week’s crypton roundup, we look at Friktion’s withdrawal, the latest offerings from Index Coop and ADDX as well as Isda’s new policy on digital asset derivatives.

Starting from 25 January, Singapore-based Friktion is shutting down its user platform while urging investors to withdrawal all their volts with no fee incurred.

The volts are structured products deployed with five different passive and quantitative strategies- income generation, sustainable stables, crab strategy, basis yield and capital protection. 

It has been a tough market for DeFi growth in recent months

‘It has been a tough market for DeFi growth in recent months. Costs have outpaced revenue, which is making us re-evaluate strategy going forward, starting with sunsetting the user platform,’ said Friktion on 27 January.

Since establishment in December 2021, the firm recorded approximately 17,000 wallets, US$3 billion in traded volume, US$300 million in value locked, 21.2% average annual percentage yield (APY) and US$11.3m in premium in total, according to the firm. As of 12pm UK time today, there was outstanding Volt deposits at around US$3.2m.

Index Coop launches structured product on ‘diversified staked’ ETH Index

Index Cooperative, a provider of on-chain structured DeFi products, introduced the Diversified Staked Ethereum Index (dsETH) on 25 January, adding to its yield strategy shelf besides sector index solutions, leveraged & inverse products.

The index aims to give token holders diversified exposure to ETH liquid staking tokens, with a weighting that favors decentralised liquid staking protocols as measured by the number of node operators as well as the distribution of stake across node operators. The initial components are the Rocket Pool ETH (rETH), Wrapped Lido Staked Ether (wstETH) and StakeWise Staked ETH (sETH2).

The new product marks the second offering of yield strategies at Index Coop after the Interest Compounding ETH Index (icETH), which is designed to stake returns with a leveraged liquid staking strategy with US$17.7m market capitalization at present. As of today, the DsETH has not booked any traded volume, according to the firm’s website.

Isda launches standard definitions for digital asset derivatives

On 26 January, Isda published new standard documentation for the trading of digital asset derivatives, alongside a whitepaper that ‘addresses some of the legal issues raised by the recent bankruptcies of major crypto exchanges and market participants’.

The Isda Digital Asset Derivatives Definitions aims to create a clear contractual framework for digital asset derivatives under the umbrella of the Isda Master Agreement, reducing credit and market risk by setting clear provisions for execution and settlement. Linklaters acted as the drafting counsel.

The definitions initially cover non-deliverable forwards and options on Bitcoin and Ether, but could be expanded to cover additional product types, including tokenised securities and other digital assets executed on distributed ledger technology (DLT). The definitions have been drafted using a controlled language structure to define the processes contained in the document, facilitating integration with the common domain model and automation within smart contracts.

The first accompanying whitepaper focuses on the importance of close-out netting and collateral arrangements for derivatives referencing digital assets and identifies several areas of focus for policymakers and market participants to ensure greater certainty. The second paper, due for publication later in Q1 2023, will focus on issues related to customer assets held with intermediaries.

Bit introduces TON/USD options in a global premium

Bit.com, a crypto options and perpetual exchange, on 26 January went live with options tracking toncoin (TON), the native token of a decentralised layer 1 blockchain the Open Network developed by Telegram in 2018.

The TON/USD options are denominated and settled in US dollars offering leverage up to 10x with weekly options available. The offering adds to BIT’s existing product suite of futures and options tied to Bitcoin and Ether.

The product is also available on Paradigm, an institutional-orientated liquidity network. TON is currently the 25th largest cryptocurrency with a market capitalization of US$2.9 billion.

ADDX rolls out tokenised version of global macro hedge fund

Singapore-headquartered private markets exchange ADDX has listed a global macro hedge fund that trades exclusively in highly liquid exchange-listed futures and options, allowing it to offer investors a monthly redemption option with no lock-in periods.

With a minimum subscription size from US$1m to US$20,000, the Asia Genesis Macro Fund is an Asia-focused global macro hedge fund strategy from Chua Soon Hock seeks to achieve investors’ twin goals of capital preservation and positive annual compounding. Net return for 2022 was +15.3% on a Sharpe ratio of 1.2.

‘Amid a broader reallocation towards alternatives by both institutions and mass affluent investors, technology is likely to be an important driver of growth for the hedge fund asset class in the coming years because it reduces the barriers to entry for investors,’ said Oi-Yee Choo (right), CEO of ADDX.

Image: Zinsmute 139/Adobe Stock.