About

The expectation of future value forms the very cornerstone of traditional financial markets. The DeFi world is no different. Various types of DeFi prediction market platforms have emerged, offering players a venue to bet on all kinds of events. However, gambling on odds has the slightest contribution to underpin the logic of DeFi financial markets, nor does it help DeFi investors hedge the material financial risks. Hence GyroX is born.

Built on EVM-compatible architecture, GyroX is designed as a decentralized hedging tool by deploying the concept of CDS (crypto default swap). All small probability events that carry great risk can be structured into a CDS on GyroX, where users can manage risk and profit from it based on their unique judgment upon the default event.

To explain the use of CDS simply, GyroX proposes an innovative use scenario built on the CDS features. Project developers with tokens listed on exchanges can create CDS against events such as the slump in token price, being delisted by exchange, or being stopped by regulators (especially for some stablecoin projects), etc, and then invite their token holders to subscribe and get their position protected. The more types of default events their CDS products cover, the more assurance they will give.

Developers can also set an incredibly high leverage ratio, say, reward 10 times the subscription fees if CDS defaults, to demonstrate their faith in the project. Not only does issuing more CDS bring the visible benefit of subscription fees revenue, but the behavior itself can be a good means for credit enhancement of the project.

For investors holding the project token and having worries about Black Swan events occurring, there is a chance for them to buy this CDS product and get 10 times the return back if CDS defaults, with no impact on their capital gain if the token price skyrockets. This forms a typical example of hedging risk.

For instance, assuming the case where the USDC issuer creates a CDS on GyroX against the event that authorities will freeze USD redemption for compliance reasons, USDC holders who want to protect against such risk can subscribe to the CDS product. On the other hand, speculators who hold a different view can make them a market by providing liquidity to this CDS product.

Besides crypto-native events, GyroX also supports markets covering hot spots of society, finance, technology, and so on, enabling issuers to create limitless types of CDS to identify the risk, price the risk, and benefit from the risk. The vision for GyroX moves beyond prediction markets by pricing the most important kind of risk in financial markets – default. As DeFi matures, defaults will happen and will shock the system. Those with the proper tools to manage such risks will benefit.