💣 A New Era For Perp DEXs With Chromatic

Alright, I know, you know, that perps protocols are bound to outperform now, and even more during the bull. The thesis? Humans prefer more leverage over no leverage. It’s really that simple. Never fade human degeneracy.

Well, how do you differentiate yourself from the competition if you are a new and fledging perps protocol? Chromatic may have found the solution by differentiating through risk management. Dynamic fees with partitioned LPs are just one of the innovative new mechanisms that, quite frankly, other perp DEXs are lacking.

In this article, we’ll dive into:

• What is Chromatic?

• Innovative LP mechanisms

• Perp DEX features galore

• Wen airdrop?

• And more!

Perps DEX Without The Risk

Chromatic is a decentralised perps protocol. Not cool enough for you? They’re trustless and censorship-resistant, eliminating rent extraction. Still not enough? They have partitioned LPs with dynamic fees? Now I’m catching your interest aren’t I. Gonna end it off with the kill shot, The protocol’s mechanisms achieves a balanced maker-taker equilibrium, meaning it is stable.

This will be crucial in a bull market when huge market volatility could easily leave a perps DEX insolvent. Mark my words. A perp DEX will blow up one day and LPs will be left holding the bag. Don’t want to be the next victim? Then Chromatic is for you.

What is Partitioned LP?

Have you ever traded on an orderbook before? Do you realise how there is a bid/ask spread that you are trading against? And do you see how that bid/ask spread widens during periods of different volatility?

Well, existing perp DEXs don’t really have that concept. We can call them “stupid” liquidity, because no matter what the market volatility is, and no matter the type of order flow the perps DEX is seeing, they always charge the same exact fee. That makes zero sense as it means that at some point you are likely overcharging traders, and at other points, you are undercharging traders for the liquidity they are taking.

By allowing liquidity providers to provide liquidity to 72 liquidity bins on Chromatic, every LP can offer their liquidity at their desired fee rates. These are split into long or short LPs, so you can provide different types of liquidity depending on whether you’re bullish or bearish.

Every, single, bin, has its own unique fee rate which represents the distance from the index price. This is how liquidity providers get fairly compensated for the liquidity they are providing, and more importantly, the risk they are taking. If it was any other perp DEX, all you’d be getting is a lousy 2bps flat fee, which really doesn’t cut it these days in the volatile market conditions.

I know, this all seems very complicated right? Fret not. Such LP strategies will be as easy as one click.

Features Galore

Partitioned LP is just one of the innovations that Chromatic has designed from the ground up.

Chromatic has separated the underlying index and settlement token. Most perp exchanges require you to hold USDT as collateral for your position, and you also receive profits in USDT. Instead, Chromatic allows you to use any ERC-20 token including stablecoins, ETH, or even memecoins like PEPE as a settlement token. That means you no longer need USDT to trade and can receive profits in other tokens. That’s a huge unlock as not everyone wants to hold USDT.

Permissionless systems are all the rage, and permissionless listings are a key component of that. Anyone can create a market on Chromatic, allowing it to be the Uniswap of perp DEXs. Not only that, anyone can create pools that replicate various risk-profiles and payoffs. This allows the protocol to cater to both active and passive LPs.

With all that, Chromatic is gunning to be the infrastructure for perp DEXs, a sure fire win for the upcoming cycle.

Traders As First Class Users Too

You may be thinking, why would I use Chromatic as a trader if they have all these variable fees. Won’t it be more expensive for me?

Well, not exactly.

Most LPs will still provide liquidity closer to the current market price, which means that liquidity is still fairly concentrated. As a result, if you are a trader, you still get pretty good execution, however, LPs have much less risk.

This means that non-toxic order flow will route through Chromatic, as their dynamic fees will likely disincentivise toxic order flow, which is good! You want as little toxic order flow as possible. Let the other perp DEXs have it.

If you’re a trader with good intentions, sure go ahead and trade on Chromatic. If you’re a large trader and think you have an edge, you’ll likely have to pay a little higher dynamic fees. Not the end of the world, but this results in a much better user experience for both parties.

Wen Airdrop?

Since everyone will have this question, we might as well address it upfront so you have a clearer idea from the get-go.

Chromatic’s airdrop program kicked off in November with Season 1. 1-3% of the total token supply will be allocated for this season. Participants can get credits and boosters, which can be used to open various boxes and receive rCHRMA. Gamified airdrops sounds fun doesn’t it?

One can get credits and boosters by performing various quests on Chromatic’s Zealy quest board, getting daily stamps, and special missions in the discord. I’ll leave it to you to explore the full details of the airdrop here.

Want a little more alpha? There will be three more reward programs coming. A trade-to-earn program, LP program, and referral program in January next year. So pack your bags and get ready for the ride.

The Grand Vision

There is no shortage of perp DEXs in crypto. There is, however, a shortage of good ones. Starting off with GMX, many perp DEXs have come along and only made small improvements. No one has made large step-wise improvements.

Chromatic is poised to change that game by executing on its vision of being an exchange at the core of futures trading. New primitives such as their dynamic LP fees, separation of index and settlement tokens, and automated margin calls allow it to create a better protocol with managed risk and a superior trading experience.

However, they know that is only one part of the equation. Every perp DEX needs ample liquidity. This is why Chromatic has taken the initiative to build and open-source reference projects for brokers and market makers.

Is Chromatic the future of perp DEXs? Only one way for you to find out anon.

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