DIVA Protocol
  • 👋Welcome
  • 🔅Introduction
    • Derivative contracts
    • What is DIVA Protocol
      • What problem does it solve
      • How it works
        • Reference assets
        • Payoff curves
        • Collateral
        • Oracles
        • Settlement
          • Timelines
          • Challenge
          • Status
          • Fast settlement
          • Fallback data provider
        • Fees
        • Compliance feature
      • Vision
      • Terminology
    • What is DIVA Token
      • Owner election mechanism
      • Token distribution
    • DIVA Development Fund
    • FAQ
  • 🌈DIVA App
    • What is DIVA App
    • Overview
    • Create position tokens
    • Trade position tokens
    • Add liquidity
    • Remove liquidity
  • ⚙️Guides
    • DIVA App Training
      • Prepare
      • Testnet
      • Create
      • Trade
      • Add
      • Remove
      • Settle
      • Redeem
      • Fees
    • Quiz
  • 🪄Use cases
    • Overview
    • Insurance
      • Credit default protection
      • Agrarian insurance
      • DeFi Hack insurance
      • Peg insurance
    • Yield optimization
      • Bullish accumulation
      • Bearish accumulation
    • Risk management
      • Downside protection
      • Increasing cost protection
    • Directional bets
      • Downside bet
      • "Bottom-Is-In" bet
      • Upside bet
      • "Top-Is-In" bet
    • Leverage
  • 👨‍🎓Pricing derivatives
    • Introduction
    • Underlying value
    • Volatility
    • Time
  • ⚓Oracle integrations
    • Overview
    • Tellor
  • ⚒️For developers
    • Overview
    • Technical resources
    • Smart contracts
      • Functions
        • Core protocol functions
        • Getter functions
        • Setter functions
        • ABI
      • Contract addresses
      • Example scripts
    • TheGraph
      • DIVA subgraphs
      • Whitelist subgraph
    • Project ideas
  • 📱Contact & Media Links
    • Social media
  • 👨‍🎓Technical Blog
    • Flash loans in DIVA Protocol
    • NDVI outcome reporting guide for Tellor Reporters
    • Enabling capital efficiency in DeFi
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  1. Introduction
  2. What is DIVA Protocol

What problem does it solve

Eliminating the need for a central intermediary in derivative contracts

The traditional way of creating and managing derivative products relies on centralized intermediaries. This introduces three main problems:

  1. Counterparty risk: User funds are at risk if the intermediary defaults or becomes insolvent.

  2. Entry barriers: The creation and management of derivative products is typically reserved for banks and not easily accessible for normal individuals, hence hampering innovation.

  3. Isolated systems & markets: The derivative products are issued in isolated systems which means assets are typically not tradeable outside of the issuer's infrastructure, hence negatively impacting liquidity.

How does it solve these problems?

DIVA Protocol leverages the smart contract technology to provide a secure, open and interoperable system for creating and managing derivative contracts without the need for a central intermediary. This is accomplished through:

  • Full collateralization: By requiring full collateralization of the derivative positions, counterparty risk and the need for margin calls are eliminated, giving users a safe and frictionless experience.

  • Blockchain: DIVA Protocol embraces the power of public and permissionless blockchain networks to remove entry barriers and foster inclusivity.

  • Standardization: Derivatives issued on DIVA Protocol follow the widely adopted ERC20 token standard, which enables the seamlessly integration into any centralized or decentralized trading infrastructure, thereby enhancing liquidity by unlocking new trading opportunities.

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Last updated 1 year ago

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