Serum Stories #8 is Out With off-piste
Serum joined by Barrett from the off-piste team is a decentralized pre-IPO synthetic derivatives protocol leveraging Serum’s DEX. Barrett shares his pertinent insights into price discovery, democratizing financial access, and what it will take to accelerate institutional adoption of DeFi.
What is off-piste?
⭐️ Off-piste is a decentralized expiratory derivatives protocol initially focused on pre-public markets, allowing individuals or institutions to gain exposure to companies like Stripe, Kraken, and Metamask.
What’s in a name?
⭐️ What off-piste really means is “a non-traditional route from point A to point B” and they are a non-traditional route for gaining exposure to certain markets.
The reason behind pre-IPO underlying
⭐️ Synthetics are a beautiful way to gain financial exposure to certain assets without needing the underlying contained in the system. For the initial focus of the protocol, this is very beneficial because the platform can enable that financial exposure without having to come in contact with the underlying shares or tokens. Given that these products are synthetic, the trading of these derivatives does not have a direct impact on the cap table and allows for the markets to remain liquid, meaning positions can be entered and exited at any given time. In a traditional secondary market, the frequency and terms of turnover can be dictated by a specific organization’s bylaws or jurisdiction.
The founding story
⭐️ off-piste was originally a quantitative matchmaking platform for startups and investors. The algorithm would recommend a company its best-suited investors and subsequently recommend an investor, startups that were aligned to their portfolio. I have always been fascinated with quant finance and believe it will make its way into private capital markets, but in the end, we decided that what we had built was not going to impact the world at the scale in which we would like. The platform would be serving a niche group of investors and founders and not truly democratize access to private capital markets.
Orderbooks and institutional users
⭐️ An orderbook DEX allows for an easier transition into DeFi for these institutional participants because they do not have to learn about an additional new piece of technology. Also, we believe the best way to be a price discovery mechanism is to be orderbook based, another reason why we chose to build on Serum.
Getting the institutions onboard
⭐️ One recent feature of Serum that makes off-piste possible is permissioned markets, where an authority account can control who trades on a specific market. Market listers can choose how their order books are used. This gives more freedom to programs composing with the DEX.
Few institutional opportunities:
Trading: The most obvious opportunity for institutions in DeFi is around asset management. This can be done via passive or active management styles, although given volatility in the space, I’d say active portfolio management comes first. Hedge funds are already leading the charge for institutional money managers in the space, at the end of the day, these funds get paid to speculate.
Lending: Another institutional opportunity is lending, but this is a bit farther out in our opinion. The lack of KYC makes it hard for corporations to take loans in DeFi and just as hard to be lenders. Platforms like Aave have gone with a bifurcated approach and plan to launch a KYC’d version to attract institutional borrowers and lenders.
Art: Auction houses and music platforms are already starting to adapt to the NFT space. The ability to have royalties programmed in is a big draw for artists of all types and believe this will force industry giants to adopt this segment relatively quickly. We have already seen this with Sotheby’s and Christie’s auction houses.
A message to off-piste’s followers!
They love the excitement, they are also very excited for the upcoming months as well. Definitely thrilled about the partnership with Serum regarding the integration of the protocol with the DEX!
About off-piste
off-piste powering the new frontier of the private capital markets on Solana.
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About Serum
Serum is a decentralized exchange (DEX) and ecosystem built on Solana that brings unprecedented speed and low transaction costs to decentralized finance.
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