APEY Fi

APEY is a perpetual trading protocol for APY (Annual Percentage Yield). We built a decentralized financial system enabling users to trade perpetual contracts (derivatives without an expiration date) based on APY rates of various financial instruments. Here’s a breakdown of how this protocol works:

1. Perpetual Contracts: Perpetual contracts allow traders to speculate on the future APY of various assets (like DeFi protocols, staking yields, or lending platforms) without having to hold the underlying assets.

These contracts do not expire, meaning traders can hold their positions indefinitely, benefiting from either an increase or decrease in APY depending on their position (long or short).

1. Underlying APY Sources: The APY for these contracts could be based on a wide range of yield-bearing activities: DeFi lending platforms (e.g., Compound, Aave) Staking pools (e.g., Ethereum 2.0 staking) Yield farms (e.g., liquidity provider returns) Real-time data on APY is pulled from oracles, which are trusted third-party services that provide reliable data feeds.
   Currently we just use Lido data for this.

2. Leverage: Traders can use leverage to amplify their positions on future APY movements. For example, if a user believes a certain APY will increase, they can take a leveraged long position to maximize their returns, but at the risk of liquidation if the APY moves against them.

3. Funding Rates: In a perpetual trading protocol, the positions of long and short traders must remain balanced. Funding rates are periodically exchanged between long and short positions to incentivize this balance. If there are more long positions (traders betting on APY increasing), longs pay a funding rate to shorts, and vice versa. This mechanism keeps the contract price close to the spot APY rate.

4. Liquidation: If the APY moves significantly against a trader's position (especially leveraged positions), their position can be liquidated to ensure the protocol's solvency. This protects the platform from becoming under-collateralized.

5. Collateral and Margin: Users are required to deposit collateral to open positions. The amount of collateral required depends on the leverage used and the volatility of the APY.

Use Cases: Speculation: Traders can profit from predicting APY movements. Hedging: Yield farmers or DeFi stakers can hedge their exposure to falling APY by taking short positions. Leverage Yield Farming: Users can use leverage to amplify their exposure to high APY DeFi protocols without directly interacting with the underlying platforms.

This perpetual APY trading protocol offers traders a flexible way to gain exposure to yield fluctuations across the decentralized financial landscape without the need to lock capital into staking or lending protocols themselves.

On run, Staked ETH lido API is used to create a yield fi perpetual program that allows users to bet on yields of other staking protocols. APEY Fi brings a new market to life. By tapping into the yield/interest markets we can effectively incentivize users to solve the Lido centralization problem, by betting on the yield market, winners get the chance to increase their principal and earn interest, while losing bets are liquidated.

The front end is mostly built on the “main” branch which is a dashboard displaying the current Lido APY along with long and short buttons with a leverage slider for users to be able to bet on whether that APY will go up or down over time as a perpetual derivative The Lido APY is pulled using a Rust program (src/main.rs) that pulls the data from a Lido API and simulates a trusted oracle providing the data but in our case is just signed by our deploying wallet to push the data into the smart contract (deployed in Remix, “backend” branch:/contracts/LidoAPYPerpetual.sol) The data then gets pushed on init (cargo run) which calls the updateAPY function in the smart contract and listens on a heartbeat every 5 seconds This smart contract allows users to take perpetual, leveraged positions on whether the Lido APY increases or decreases, using RBTC as the financial instrument at stake in order to utilize the largest asset in crypto giving it exposure to a new financial derivative based on one of the largest TVL protocols in the world For communicating the state of the smart contract to the front end, we deployed a subgraph that can reference the underlying APY data from and use it to push the user requests for derivative trading to the smart contract