Drift Protocol — 2022 Outlook
If you thought 2021 was incredible, wait till you see what we have in store for 2022…
A closing word to our supporters — 2021, a year in review.
To our valued and loved Driftoors,
We would like to thank each and everyone of you, from the bottom of our hearts, for an incredible 2021. This year, we:
- shipped out our Devnet;
- launched our V1 to a closed Alpha Mainnet gated by Drift Alpha Tickets;
- shipped our closed Alpha Mainnet to an Open Mainnet; and
- raised a $3.8M seed round.
We also, in under 6 weeks:
- hit $650M in volume traded in;
- reached 6k+ unique traders on Drift;
- achieved $10M in trader open interest with $4.5M in collateral vault balance; and
- launched 6 trading markets.
None of this would have been possible without your continued commitment, belief and support in our vision. We’re eternally grateful to our passionate community members — including the great developers, researchers and marketers alike — who have been helping us along our journey at every turn.
We’re so incredibly energised to be working alongside such an amazing community and team to bring Drift’s vision to life. Together, we will build the best on-chain derivatives protocol.
Our goal for 2022 remains unchanged — to prove that decentralised derivatives exchanges are the best way to trade futures. Period.
So, how is Drift going to prove this?
Well, we have some broad action plans scheduled for the next few months. Everything from here on out is to transition Drift into a fully decentralised derivatives exchange with the features and functionalities of a full service traditional CEX (except without the centralisation).
There’s a *lot* of work to be done and even more to look forward to!
With that being said, here’s our plan for 2022.
Product Outlook for 2022
We’ve said this multiple times (and we’ll keep saying it) — here at Drift, we’re focused on building what our users want and optimising the user experience to be as smooth as possible for you.
As such, we’re excited to announce our plans to ship some of the most requested for features in early 2022.
1) Limit Orders and Stop Orders
Limit orders and stop orders have been, by far, the most requested feature we’ve heard in 2021, and — guess what? We’ve heard your demands!
Limit orders are essential to navigating volatile markets, particularly when you may not want to pay slippage immediately in order to take a position against aggressive market conditions.
Our focus has been to ship out decentralised limit orders that are efficiently settled by an order keeper mechanism — similar to how liquidations are open-sourced for anybody to fill. This novel mechanism can be described as a hybrid vAMM-orderbook style model where queued orders are settled against the vAMM rather than on an orderbook (more on this later!).
We’re confident that queued taker orders will greatly improve slippage and market depth on Drift, as well as boost user experience.
2) Higher Leverage (10x+)
Currently, users on Drift can trade with up to 5x leverage. This limitation is mainly due to two factors: (1) the efficiency, size and number of open-sourced liquidators on the market; and (2) the likelihood of levered losses on the platform.
We want to ensure our platform is secured by world-class liquidators that are able to close out losing positions before any platform losses occur.
Luckily, with the launch of our Bounty Program, we’ve had some awesome contributors that have submitted open sourced liquidator bots in Rust, Typescript and Python for anyone to run. At this stage, around 90%+ of our liquidations are carried out by third-party liquidators. This gives us the confidence necessary to consider offering higher leverage.
3) Better Slippage on Market Orders
This is an ongoing priority for Drift. We understand that a big pain point for users has been the relatively high slippage on market orders currently, and slippage is never pleasant for traders.
Our dynamic vAMM currently adjusts our virtual reserves to fit to current market trading demand whilst maintaining healthy markets. Our goal for Q1 this year is to ensure a more immediate process for our DAMM to adjust and fine-tune the virtual reserves such that it fully adapts to trading demand in real-time. We want to ensure the best trading experience for our users — and that requires having the best market pricing!
4) New Markets
Providing new markets is another Q1 priority. We understand that interest in new markets moves at the speed of light, especially when it comes to crypto. Thankfully, perpetuals allows virtually any market to be tradeable (including with leverage), with only one limitation — reliable oracles for the underlying market must exist.
Adding new markets is the bread and butter of any trading exchange. We plan to keep a close ear to the ground and quickly list popular assets. We picked up on the recent L1 boom and added $LUNA and $AVAX as soon as their Pyth oracles launched. Next up in those categories — we’re looking at $MATIC, $ATOM and much much more.
We’re also always looking to improve our listing process for what our community wants to trade, so be sure to let us know by tagging us on Twitter or Discord!
5) Passive Strategy and Funding Rate Vaults
The recent launch of options vault platforms on Solana, like Friktion, Katana, Chest and (soon) Ribbon, has led us to see a promising potential opportunity to extend funding rate vaults to perpetual swaps. Perpetual swaps are a natural yield opportunity, similar to cash and strategies, except that they have variable yields.
You’ve probably seen high absolute funding rates across the board on Drift. This presents a large opportunity to arbitrage funding rates between different platforms, such as via Mango or FTX.
A simple example that discounts fees: If Drift’s funding for AVAX-PERP is 350% annualised and Mango’s is 180% annualised; then, users could write a strategy to long AVAX-PERP on Mango and short AVAX-PERP on Drift. This strategy could be run until the funding opportunity is closed and the price converges — capturing the user net +170% in annualised profits.
That, or there could just be a vault that allows you to invest in this strategy with a single click.
We’ve also recently open-sourced CPI (Cross-Program Invocation) examples where a Solana program can make calls to another Solana program. This would enable users to deposit into passive vaults to run fully on-chain funding rate yield strategies and earn solid and sustainable APRs with a single click.
We’re extremely bullish on the Solana ecosystem and we’re invested in its success. Hence, we’re keen to work with structured product projects like Friktion, Katana and Chest Finance to give everyone a chance to earn yield from passive vaults!
But ser, is that it for 2022??
Definitely… NOT.
2022 is going to be *huge* and we’re not stopping until Drift is the number one decentralised futures exchange available on any chain.
Beyond everything we’ve already talked about, we’re also looking to explore the following features and directions:
- Decentralised Frontends — Our core principle at Drift is to emphasise decentralisation in every aspect, including: liquidators, arbitrageurs and soon, frontends. This year, we plan to open-source our UI so that *everybody* will be able to run their own frontends to connect with Drift’s backend contracts. Parties who run frontends can receive a percentage of fees from the trading that occurs on their interface.
- Cross-Collateral — Another big feature for us this year is to enable cross-collateral. It’s a big need for traders to use their coins as collateral and not have to liquidate their holdings into USDC to trade on Drift.
- Yield on Margin — How about being able to earn yield on your idle holdings that are not being used as collateral for positions?
- Research Papers — Beyond features, we also want to flesh out our research arm. We’re starting to explore deeper into Drift’s core ideas like algorithmic re-pegging and we’re looking to release more research papers, simulations and thought pieces on how Drift’s DAMM works.
Concluding Notes
Beyond all this, a major focus for us in 2022 is to engage with our community in the continued development of the platform and to stay true to our mission to empower users to hold on to their own funds whilst still being able to trade futures with leverage.
We want to energise and rally users to own their trading experience on our platform and to build together towards being a fully decentralised, community-led protocol.
Again — we are ~i n c r e d i b l y~ grateful for all the support and participation this year. Thank you for joining us on this wild ride and we look forward to another meme-filled, high-volatility year with all of you!
🚨🚨 We are hiring 🚨🚨
Get in touch with us via email if any of the below roles suit you.
- Frontend Engineer (Mobile)
- Smart Contract Engineer
- Full Stack Engineer
View full list of available roles at Drift Protocol here.
Get In Touch!
🌐 Visit us at drift.trade 🌐
📩 Email us at hello@drift.trade 📩
💬 Connect with us on Discord 💬
👾 Find us on Twitter — @DriftProtocol 👾
