Degis will protect CAI in Price Protection!

CAI is the benchmark index for investors wanting to get exposure to the Avalanche ecosystem. It is composed of the native token (AVAX) and the largest applications in the sector. As the native protection protocol on Avalanche, we’re excited to announce that Degis Price Protection will protect Colony Avalanche Index (CAI) in the coming batch!

Degis Price Protection model

Price Protection is the next-generation token price protection designed by Degis in this rapidly changing crypto world. We use a token model in Price Protection, each token represents a protection and can be freely traded in the market. If the insured token price falls below the trigger price when the pool expires, the protection token owner will be compensated. Otherwise, the protection token creator can get the staked collateral back.

Users can choose to become creator, buyer/seller and provider in the protection period based on their understanding and prediction of the token price, and adopt various strategies to maximize their profit. Creators can stake stablecoin to mint protection token, and they can choose to hold or freely trade them in the AMM pool. For providers, they can deposit token pairs into the swap pool and use the LP token earned to mine and harvest juicy rewards.

How to use Price Protection?

Suppose CAI protection will be available on September 28th.

Using our default time period, the protection will expire on Oct 15th, 2022.

Basic Information:

Type: CAI Protection

Trigger Price: $90 (assume)

Expiry Date: 2022–10–15

Compensation: Protection token holders will be compensated $1 for each protection token if the price of CAI calculated on expiry day is lower than $90 (i.e. Lower than trigger price)

Think about it…

If you spend $900 buying 10 CAI at the price of $90 and use it to provide liquidity.

If the price on 2022–10–15 is higher than the original price ($90), you can earn from both price benefit and LP mining rewards, which is the best situation.

But what if the price of CAI is lower than $90 on that day? You may not necessarily make money from this operation…

That is why we need Price Protection.

Time to protect

Suppose the price of CAI protection token is $0.5, Let’s see how you can protect your crypto asset with Degis Price protection:

If you want to cover the risk that the price of CAI falls from $90 to $80, you can buy 200 protection tokens on Degis. Cost: $900 for 10 CAI + $100 for 200 protection tokens, which cost $1000 in total.

At the expiry date you will gain: 200*$1 = $200 for compensation. If the price of CAI falls to $80, your total asset is still: $800 + $200 = $1000 which means you can totally enjoy your rewards from LP mining!

If the price of CAI is between $80 and $90, you can even benefit from the protection you bought, for example, if the final price of CAI is $85, your total asset on the expiry date is $850 + $200 = $1050! While you are still enjoying the return from yield farming.

On the other hand, if the price of CAI is going up, you can still sell the protection token before the lock-up date.

For example, on 2022–10–5, the price of CAI increased to $100, and the price of the protection will drop, let’s assume the protection price drop to $0.1. If you sell all of your protection tokens now, the total assert for you now is : $100*10(10 CAI) + $0.1*200(for protection tokens sells) = $1020, even greater than your initial asset!

Time period of Price Protection

There are 3 periods in one batch of the Price Protection. The first day is the deposit period when protection tokens are minted by the deposition of stablecoins, and the initial price of the protection token will be settled at the end. Then during the trading period, there are 14 days for users to conduct a series of actions (like create/redeem protection tokens, buy/sell protection tokens in the swap pool, provide/withdraw liquidity, etc.), users can also harvest juicy mining rewards in this period. The last 3 days before the expiry date is called the locking period, in which only liquidity providers can provide/withdraw their position in liquidity pools.

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