The platform introduces the first strategy leveraging Power Perpetuals and suggests it will add more in the future.
A Quant Strategy for Slow Markets
Friktion launches a new automated trading strategy to generate returns in sideways markets.
The protocol announced that the “Crab Strategy” Volt is live on April 11 via Twitter. Under the hood, the Volt collects the positive funding rate from a Power Perpetual short position on entropy.trade. And to hedge this short, it longs a normal perpetual of the same asset.
“The next Friktion Volt you’ve been waiting for is LIVE LFG! You can now harvest volatility yield in crab (sideways) markets using Power perpetuals! As we take off, Volt capacities will be increasing, so stay on the lookout if you’re looking to earn!” shared a Friktion team member on their Discord.
This is the first Friktion Volt strategy using Power Perpetuals. The first Volt, following this particular strategy, uses Bitcoin as the underlying asset. Users can deposit $USDC and currently earn a projected APY of 58.7%. The Volt is profitable when the underlying asset is within a specific price range. Conversely, if the price goes above or below, it turns unprofitable. The protocol will add more Volts in the future, building on this primitive.
Friktion now has three Volts following distinct quantitative yield strategies built around capital protection, income generation and volatility.
What is a Power Perpetual?
A perpetual is a fixed income security with no maturity date. Bonds of this type are often considered equity rather than debt.
A power perpetual is a derivative indexed to a power of the price of some underlying asset. Because the payoff is asymmetric, the power perp will always trade at a premium to the index. This will cause the funding rate to always trade at a positive rate.
What is Friktion?
Friktion is a DeFi portfolio management protocol that runs on Solana and is designed to perform across market cycles. It is an asset management tool that automatically allows users to maximize returns while mitigating risks by employing ‘Volts’ strategies.
The platform provides both active and passive portfolio management strategies. It is essentially an Automated Portfolio Manager (APM) that was created to identify long-term sources of yield and introduce risk management into the ecosystem via options and non-linear products.
Where to find Friktion:
Source : web3wire.news
