The partnership between Aori and Monad represents a significant development in blockchain and decentralised finance (DeFi). Aori, the developer of a decentralised options trading protocol, is focused on creating innovative solutions for DeFi, with an emphasis on decentralisation and scalability. Monad, a Tier 1 blockchain, provides high throughput and performance while maintaining decentralisation principles. This collaboration reinforces Monad’s strategy to develop an ecosystem of decentralised applications and platforms for DeFi.
Partnerships like this with Aori help Monad attract the attention of developers and investors ahead of the mainnet launch. Through this partnership, Monad is expected to provide support for Aori’s decentralised trading solutions, which will help develop a more efficient infrastructure for DeFi.
Now we will try to consider what is the uniqueness of the project and why it is worth paying attention to it when it will work in the monad network.
The Aori project is an innovative blockchain-based high-frequency asset trading platform. Its key advantage is that it combines the speed and convenience of centralised exchanges (CEX) with the security of a decentralised architecture that eliminates the traditional risks of centralised solutions. This allows users to trade large volumes of tokens without the need for intermediaries and centralised exchanges.
The Aori protocol consists of the following components:
OPTIONS: This is the layer that is responsible for creating (minting) and executing options with full collateral. This means that each option has full collateral to guarantee its execution.
TRADING: A system for trading options based on an order book (a centralised list of buy and sell orders). Users can place limit orders, i.e. specify their own conditions for buying or selling options.
MARGARAGE: These are decentralised pools where users can borrow or lend to trade on margin (leveraged), which increases potential profits but also risks.
PRIVILEGE TO PARTICIPANTS: Active users of the protocol can receive privileges such as no trading or settlement fees if they make frequent transactions.
STRUCTURED PRODUCTS: These are automated repositories that create and manage complex financial products (combinations of options and other assets) within the Aori protocol, simplifying the work for users.
In this way, Aori offers a comprehensive platform for options trading, margin operations and structured product management, with benefits for active participants.
Aori aims to create a platform for trading options on digital assets that will be suitable for both institutional and private users. The main principles of the project include transparency, no need to rely on intermediaries, reduced counterparty risk, improved pricing and user participation in the management of the platform.
The challenges of cryptocurrency options today and how these challenges are being addressed by Aori.
Problems with centralised exchanges: When traders use centralised exchanges or brokers to trade options, they face counterparty risk. This means that if the exchange or broker turns out to be unreliable, users could lose their funds.
Problems with decentralised exchanges (DEXs): On DEXs that operate with automated market makers (AMMs), the system can be inefficient:
Capital efficiency: User funds may be used inefficiently, resulting in lower profits.
Pricing problems: Current models do a poor job of accurately pricing options, making trading less profitable.
Difficulty scaling: Decentralised options markets are difficult to scale because smart contracts do not always accurately price options, leading to errors and losses.
High volatile losses: When trading options on AMMs, losses due to price changes can be significantly higher than when trading tokens on spot exchanges.
So, current cryptocurrency options trading platforms are either insecure (in the case of centralised exchanges) or inefficient (on decentralised platforms), which creates difficulties for traders.
How Aori solves options trading problems:
No counterparty risk: Aori eliminates the risk associated with settling with counterparties. This is achieved by requiring full collateralisation for all options, which means that each option has sufficient funds to guarantee its execution. Thus, traders do not risk losing their funds due to the unreliability of the other party.
Maximum Losses and Profits: Aori options have limited maximum losses and profits, making them more predictable for traders.
Margin Pools: Aori creates special margin pools that are managed by a manager known as ‘Aori Prime’. These pools provide partial collateral for traders, but all settlements remain fully protected. This allows traders to utilise borrowed funds without risking their assets.
Order Book Based Trading Protocol: Aori uses a centralised order book for trading, which allows for more accurate option pricing. This eliminates the problems of volatile losses common to decentralised platforms.
Thus, Aori offers a more secure, predictable and efficient platform for trading
Aori and Monad represent a significant step forward in decentralised finance, creating a platform that combines security and efficiency. The partnership of these projects not only contributes to the expansion of opportunities for traders, but also opens new horizons for the development and implementation of innovative financial instruments. Aori offers reliable solutions to current problems in options trading, making it an important player in the DeFi market. Looking forward to launching Aori in the Monad ecosystem, we expect it to attract the attention of individual traders and institutional investors alike.
