The current global financial system hinges upon Decentralized Finance (DeFi) and Centralized Finance (CeFi). For a long time, the world failed to align the two systems. However, many organizations are striving to find the best fit between these two financial worlds.
Not surprisingly enough, the DeFi and CeFi offer similar services such as borrowing, lending, trading, and payment. Therefore, it makes sense to find a bridging gap between the two. Jarvis, a decentralized brokerage protocol, bridges the gap between DeFi and CeFi in a greater way than before.
The Jarvis Network aims at universalizing market access and brokerage. The Jarvis Network allows users to trade any financial assets and market with stablecoins on Ethereum, and provides market maker a decentralized brokerage framework to provide liquidity to earn yield.
The Jarvis Network is actually a set of protocols. As of today, they have unveiled two of them, the Margin protocol (Margineum), a trust-minimized off-chain protocol which allows to go long and short with leverage on trading pairs, and the Synthetic protocol (Synthereum), an on-chain protocol which allows to issue capital-efficient synthetic assets tracking the price of other asset.
With these value proposition, Jarvis aims at bridging both Defi and Tradfi and sere as a gateway to welcome millions of traditional investors in Defi.
How it works
The two protocols do work the same way: traders open position or issue synthetic assets collateralized and settled with USDC, against liquidity pools supplied by market makers who can offset their exposure to remain market neutral. All the fees are collected by market makers and by the DAO.
Margineum works like a L2 solution, and is used to carry out large volumes of transactions and instant trades. Traders deposit USDC in the liquidity pool to open off-chain leveraged long/short position against market makers; all the trades and prices are recorded on a distributed storage network by the Validators, which allow to maintain every traders and market makers balances and every price changes in a trustless way; when either a trader or market maker withdraw funds, Validators check all the data and authorizes or rejects the withdrawal. Market makers run Dealing Desk Nodes which can be connected to a broker or exchange to automatically hedge their risks.
Margineum aims to move to zk solution in the near future.
Synthereum is built on the top of UMA’s priceless framework and is used to issue highly composable and interoperable synthetic assets on Ethereum. Traders deposit USDC in the liquidity pool to issue synthetic asset; unlike with MakerDAO or Synthetix, they do not need to overcollateralize the assets: they only deposit its exact value. If they want to issue 100 dollars worth of Euro or Oil, they deposit 100 USDC in the pool. From their point of view it looks like a classic swap. In fact, their deposit is matched by Relayers with the deposit of market makers. The latter bear all the risks: they are responsible to over-collateralize the asset and maintaining enough collateral ratio to avoid liquidation (they are the only one facing liquidation risks). They are the counterpart of the trade thus backing the traders profit and losses. They can offset these risks by hedging their exposure on Margineum.
Synthereum’s synthetic assets are the only one which can be redeemed for their collateral by anyone, facilitating fiat on and off ramp as well as arbitrage: anyone buying jOIL or jCHF on Uniswap can redeem their exact value in USDC. Therefore, Synthereum’s synthetic assets have the same liquidity as USDC. (Read more in this article: https://medium.com/jarvis-network/synthereum-vision-and-roadmap-e334bc055fbb)
The Jarvis Reward Token (JRT)
The JRT governs and secure the Jarvis Network protocols. It is used as a governance token in the DAO, whose have to decide on what to do with the fees it collects and how to distribute the JRT it holds in a way to incentivize the network participation. The DAO also settle dispute.
The JRT is also used to secure the network: Validators and Relayers have to stake it in order to perform their tasks; Validators and Relayers are providing the trustless and settlement layer of the protocols.
Jarvis helps bridge the gap between the DeFi and CeFi, ecosystems, opening more investment, and trading opportunities. This speeds up the adoption of digital assets, creates flexible payment system, and unifies the world divided in terms of DeFi and CeFi.