Frequently asked questions by the DIVA community

How is the DIVA token used?

DIVA is the native token that is used to govern the DIVA Protocol. Holding DIVA tokens represents voting power in steering the future direction of the DIVA Protocol. This may include voting on protocol parameter updates or deciding on how to spend the treasury funds.

DIVA will be earned by users through various activites including participation in the testnet, providing liquidity and trading on mainnet. Users will earn a share of DIVA proportional to their activity. Token distribution activity will be proposed and voted on by DIVA token holders on a regular basis taking into account prevailing market conditions. DIVA token is not a fundraising device nor an investment opportunity.

What is an ERC20 token?

A token in general is a digital representation of value on the blockchain. It can represent virtually anything of value including a share in a company, a lottery ticket or reputation points in an online platform. Such tokens are tradable and transferrable among the various participants of the blockchain.

Having a token standard allows developers to build token applications that are interoperable with other products and services. The ERC20 standard has become the most popular token standard in the crypto space. It defines a set of basic functionality that a token should implement such as:

  • Transfer tokens from one account to another

  • Get the current token balance of an account

  • Get the total supply of the token available on the network

  • Approve whether an amount of token from an account can be spent by a third-party account

In DIVA Protocol, position tokens are ERC20 compliant which allows to integrate them into existing centralized and decentralized infrastructure and enable applications that are yet beyond our imagination.

Do I have to create a contingent pool before I can start trading?

Not necessarily. Most of the time someone will have already created a pool and the corresponding position tokens. All available position tokens are listed on the Markets page. Only if you don't find a product that meets your needs, you will have to create your own contingent pool.

Why do I have to approve when creating or filling orders?

The approval process is specific to the ERC20 standard and allows accounts other than the original owner to initiate asset transfers up to an allowed amount ("allowance") set by the owner. The abstraction of the initiator of a token transfer is one of the reasons why the ERC20 token standard has gained so much popularity.

As the trading of position tokens involves the exchange of two ERC20 tokens, both the maker and taker of an order need to set an allowance for the exchange smart contract, more precisely the 0x exchange contract, to move the assets during the exchange.

While the approval process does not result in the best user experience (mainly due to gas costs incurred), from a security perspective, it's considered best practice to approve only amounts that a user is going to trade. If you wish to reduce the approval frequency, you can approve a larger amount and continue creating or filling orders of smaller sizes.

Why do I receive both long and short position tokens after creating a pool?

The long and short position tokens represent a claim on the collateral asset that you have deposited. That means that at any point in time, you can return the long and short position tokens in equal proportions and get back your collateral. As holding both the long and short positions will not expose you to the up- or downside of the underlying, you would typically want to sell one of the sides to gain exposure according to your view of the market.

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