The Alpha Finance ecosystem offers users high returns, low risk, and interoperability within the DeFi space.
In recent years, the decentralized finance (DeFi) space has expanded from simple token swapping platforms to complex offerings such as derivatives. DeFi protocols are, however, essentially cloned versions of other more-reputable networks, often for malicious purposes. Adding insult to injury, there have been many instances of anonymous DeFi founders pulling the rug on its users. Therefore, transparency is crucial in vetting the integrity of these platforms.
Having a group of known individuals develop applications targeting different DeFi sectors is one way to increase transparency, and this is what Alpha Finance aims to do. We examine the platform in this post to see why it’s suddenly making waves in the DeFi industry.
Alpha Finance Lab Founders and Team
Alpha Finance is a collection of DeFi products developed by Alpha Finance Labs and backed by industry leaders such as MultiCoin Capital, Spartan Group, and DeFiance Capital. All three leading investment firms specialize in crypto-based investment products.
The Spartan Group, through its Spartan Capital subsidiary, focuses on “unique investment opportunities in the emergent crypto asset class.” However, the company doesn’t pursue these blindly. Rather, it performs detailed analysis to ensure high-end risk-adjusted returns.
Tascha Punyaneramitdee and Nipun Pitimanaaree lead Alpha Finance Lab where Punyaneramitdee is the project lead, and Pitimanaaree is the lead blockchain engineer. Both have vast experience and a rich educational background.
Punyaneramitdee holds a Bachelor’s Degree in Economics from US Berkeley and has held key roles in Investment Banking. She headed the Band Protocol strategy department in the cryptocurrency and DeFi worlds, where she was responsible for the network’s adoption.
Pitimanaaree holds a Master’s Degree in Electrical Engineering and Computer Science from MIT. He has previously developed sophisticated algorithms to predict stock market movements. In the cryptocurrency sector, Pitimanaaree has curated an algorithm to power automated arbitrage trading. Prior to joining with Punyaneramitdee, he was the chief researcher at OZT Robotics.
Alpha Finance – DeFi Protocol on Binance Smart Chain (BSC)
Alpha Finance offers a range of products focusing on different aspects of the DeFi space. Notably, they aren’t just products for the sake of it. Alpha Finance emphasizes interoperability, high returns, and low risk. With Alpha products, the company brings a new level of user-friendliness to applications that address unmet industry demands.
Alpha projects run on Binance Smart Chain (BSC), which the team selected for its scalability, speed, and lower transaction fees as compared to Ethereum.
In these projects, the team thoroughly investigates glaring pitfalls in the space to gain a deeper understanding before presenting a solution. Prior to bringing a product to market, the team evaluates and iterates different approaches to find the solution that perfectly fits the gap. This is called the problem and solution statement.
Alpha Finance’s mission is to solve problems and encourage more people to get on board the DeFi train.
Challenges of DeFi
DeFi Usage and Demand Is Limited
As developers have flocked to the Ethereum blockchain to build DeFi networks, the demand for DeFi is capped. Despite being able to interact within Ethereum, these projects cannot connect to other networks such as Cosmos and Polkadot (unless a bridge is available). Ethereum is also plagued by scalability issues, further reducing the demand for and usage of DeFi applications.
Supply Is Restricted
While DeFi is meant to be decentralized, most assets are hosted on centralized platforms, limiting supply to these protocols.
Assets flowing into DeFi projects reveal conditions like impermanent losses that prevent users from supplying liquidity to the current breed of DeFi networks.
Major Alpha Finance Products
Alpha Homora – Leveraged Yield Farming and Liquidity
A new approach to leveraged trading is introduced through leveraged yield farming and liquidity mining.
AlphaX – DeFi Perpetual Swap Trading
DeFi users can interact easily with perpetual swaps here. Additionally, the platform connects to Alpha Homora so yield farmers and liquidity providers can hedge their leveraged positions, neutralizing market positions.
In a nutshell, Homora maximizes returns while AlphaX limits downside risks.
AlphaX draws inspiration from Uniswap, a leading DeFi network that enables decentralized spot trading. As a result, Alpha Finance Labs developed a product that allows anyone to take a leveraged long or short position. Additionally, it has a user-friendly interface.
The protocol sets itself apart from other similar initiatives because it is non-custodial and does not require users to follow Know-Your-Customer (KYC) procedures.
Unique AlphaX Features
- The Funding Rate Is Connected with The Price : Perpetual swaps require that open positions be funded at a given rate after a particular period of time, usually hours. AlphaX combines the funding rate and the price to eliminate the hassle of remembering the rate for users. The funding rate payments are captured by automatically adjusting the price. Due to this, the price diligently tracks the underlying asset’s price without traders having to constantly fund their long or short positions. Through this, perpetual swaps can be traded like spot transactions.
- Open Positions Can Be Tokenized and are Fungible : ERC-1155, Ethereum’s multi-token standard is used for tokenized shorts and longs. The tokens are then wrapped into conventional ERC-20 tokens. Why is it necessary to do all this? Good question. Unlike ERC-1155 coins, ERC-20 tokens are easier to trade and stake. In addition, the wrapped tokens can be used as collateral on other products when the user holds an open long or short position.
- Reduced Slippage : It’s important to note that AlphaX does not use an order book. As a result, its formula for determining price slippage is constant. One disadvantage of this approach is that traders may encounter low slippage, but they’ll have to inject more funds to affect the market. Furthermore, slippage can be too high, dissuading traders from opening large positions. To prevent traders from experiencing either extremes, AlphaX adjusts the formula’s outcome dynamically.
Alpha Finance Native Token (ALPHA)
As Alpha Finance is a collection of various DeFi applications, the ALPHA token interacts with all of its products. Alpha Homora and AlphaX, for example, use the token for governance purposes.
Uses of The ALPHA Token
There are three distinct ways of using the ALPHA Token –
- Governance : As a governance token at the product and Alpha Finance levels.
- At the product level, the token unlocks governance capabilities for critical aspects of each Alpha product.
- In the Alpha Finance ecosystem, the base asset allows its holders to make critical decisions concerning the interaction of different portfolios in the broader Alpha Finance ecosystem.
- Utility : ALPHA is designed as a utility token. Here, holders can earn a section of fees charged on the network by providing liquidity or staking to receive staking rewards.
- Functionality : It’s a work token unlocking more functionalities for users interacting with Alpha Finance products.
Future DeFi Revolution leveraging BSC and ERC-1155
Alpha Finance brings a new revolution to the DeFi ecosystem with its experienced and highly educated team. Alpha Finance takes a unique approach to powering different facets of DeFi by leveraging Binance Smart Chain and wrapping ERC-1155 tokens.
Holders of ALPHA tokens have a voice when it comes to making critical decisions about the project. In addition, the token powers staking and liquidity provision, giving its holders more value.