🎥Products
Spot, Perpetuals, and Integrated Money Markets. Vertically integrated and bundled together into a singular DeFi app -- Blitz.
Blitz is a cross-margined decentralized exchange (DEX) protocol offering spot, perpetuals, and money markets in one vertically integrated application on the Blast L2 network.
Decentralized Exchange (DEX)
A decentralized exchange (DEX) is a cryptocurrency exchange operating on a decentralized network like Ethereum. It allows for peer-to-peer (P2P) trading of cryptocurrencies without intermediaries, such as centralized exchanges.
DEXs play a crucial role in decentralized finance (DeFi) as trustless and permissionless liquidity hubs for trading crypto assets. DEX users retain complete control over their assets – commonly known as selfcustody.
DEXs usually operate under two models: automated market makers (e.g., AMMs like Uniswap) and central-limit orderbooks such as CLOBs like dydx.
Blitz – Hybrid AMM / CLOB Model
Blitz is powered by a hybrid DEX model that unifies the central limit order book (CLOB) and AMM architectures to provide optimal liquidity and access for all users.
Trading accounts on Blitz deploy unified cross-margin by default, meaning multiple positions’ liabilities are shared across a user’s portfolio to offset margin requirements. This allows for greater capital efficiency and increased trading activity while balancing risk.
Blitz is native deployment of the Vertex smart contracts on-chain to Blast. The Blitz smart contracts control the risk engine and core products on-chain -- while the off-chain sequencer functions as the synchronous orderbook liquidity layer on the back-end sharing liquidity between Blitz and Vertex on Arbitrum.
03/11/2024: More EVM chains will be supported by Vertex Edge in 2024. As a result, the compounding effect on better liquidity ripples across each new chain running a Vertex Edge instance, where every chain benefits from the addition of the chains that preceded it.
Every existing Edge instance, such as Blitz and Vertex (Arbitrum), benefit from the trading activity of any new, additional chain.
Put simply, more EVM-compatible chains supported by Edge equates to better liquidity between all of the Edge instances like Vertex and Blitz.
Blitz is non-custodial, meaning users always retain control over their assets on-chain.
For more details on Blitz's technical architecture, including its hybrid orderbook-AMM design, please refer to the documentation section here.
Blitz's Core Product Suite
Blitz's technical nucleus produces the optimal architecture for a vertically integrated product stack – containing three core products of DeFi. These include:
Spot Markets
Perpetual Markets
Money Market
Bundling three of the most popular DeFi products into a single DEX on Blast produces an experience where users can tap into three financial primitives within one interface. As a result, users do NOT need to switch between siloed DeFi applications such as an AMM, perpetual DEX, or money market to access the most popular primitives of DeFi:
Buying and selling assets.
Going long or short derivative contracts with leverage.
Borrowing/lending pooled assets.
Vertical product integration provides myriad advantages in capital efficiency, reduced costs for users, and offers an improved overall user experience. Liquidity and pricing are improved as arbitrage drives tight and efficiently priced markets for users to trade against. The features of each of Vertex’s three core products are defined below.
Spot Markets
Spot markets refer to the buying and selling crypto assets for immediate delivery and payment. In other words, buying a crypto asset on an exchange’s spot market, with immediate settlement.
This is in contrast to other financial markets, where you may buy and sell assets for delivery at a future date – referred to as derivatives (e.g., perpetuals and futures) since their price is derived from the underlying asset.
Spot markets on Blitz trade 24/7 – meaning you can buy or sell assets at any time of day or night.
On Blitz, you always retain custody of your spot assets on-chain.
Blitz’s spot markets allow you to buy or sell listed crypto assets paired with USD-denominated stablecoins.
All spot assets on Blitz are quoted in the Blast-native USDB stablecoin.
Launch spot markets on Blitz include:
wETH / USDB
03/11/2024: Please note that unified cross-chain liquidity between Blitz (Blast) and Vertex (Arbitrum) will initially only support perpetuals upon the Blitz mainnet launch on Blast. Spot market liquidity utilizing Vertex Edge's synchronous orderbook liquidity will be added shortly after the official Blitz mainnet launch.
Asset Parameters: Listed spot market parameters on Blitz can be reviewed in the documentation section here.
Additional resources relevant to trading on Blitz spot markets include:
Blitz plans to continually list new spot assets beyond the inaugural asset list upon mainnet launch.
Stay tuned for the post-mainnet release of unified cross-chain spot trading between Blitz, Vertex, and future supported cross-chain instances of Vertex Edge on other EVM-compatible base layers.
Perpetuals Markets
Perpetual futures contracts are derivatives that allow users to speculate on the price movements of crypto assets without taking delivery of the underlying asset. In contrast to conventional futures contracts, perpetual futures never expire and can be held indefinitely.
The contract price is tethered to the underlying asset’s spot price via funding rates.
Funding rates modulate the incentive to trade long or short by assigning a positive or negative carry cost to a specific perpetual position.
When a perpetual’s price is higher than the spot price, traders with long positions (i.e., those betting that the price will go up) must pay a funding fee to traders with short positions (i.e., those betting that the price will go down). This funding fee helps to bring the perpetual price back in line with the spot price.
Conversely, when the perpetual’s price is lower than the spot price, short traders are required to pay a funding fee to long traders, incentivizing the opposite behavior.
You can find a breakdown of Blitz’s funding rate calculations here.
Perpetual products are primarily used for speculation and risk-hedging purposes and are the most popular futures product in crypto markets. Blitz’s perpetuals enable traders to go long or short crypto assets with up to 20X leverage to amplify price exposure or hedge risk.
Perpetual markets on Blitz also share liquidity with Vertex on Arbitrum via Vetex Edge's synchronous orderbook liquidity -- displaying the combined resting liquidity profile of both Blitz and the Vertex DEX to users of each app concurrently.
Synchronize your cross-chain liquidity, anon.
Perpetual markets on Blitz trade 24/7.
All of Blitz’s perpetual products use USDB as the primary collateral.
Users can provide other spot assets as collateral in the Money Market, which Blitz’s cross-margin system can then leverage to back perpetual positions.
You can find a comprehensive list of the perpetual and spot markets available on Blitz below:
Maximum Leverage (Perpetual): 20X
Oracle Pricing: Perpetual contract oracle pricing is derived from Blitz’s oracle provider Stork Oracle.
You can find details concerning Blitz’s oracle architecture here.
Health: Calculations of weighted margin (i.e., health) related to a cross-margined account with open perpetual positions can be found here.
Liquidations: Details on how at-risk perpetual positions are liquidated on Blitz can be found in the link here.
PnL Settlements: Information on PnL and how perpetual positions are settled on Blitz is available in the section here.
Going long or short a perpetual contract is more nuanced than buying or selling assets in Blitz’s spot market. Users should be aware of the prevailing risks associated with trading leveraged perpetual products.
Additional resources relevant to trading perpetual products on Vertex include:
Blitz Community Points -- Powered by Galxe
Blitz plans to continually list new perpetual markets beyond the inaugural asset list upon mainnet launch.
Please stay tuned to the Blitz socials and community channels for new perpetual product listing updates.
Vertex users are advised to be mindful of the risk involved in trading perpetual instruments. Please read relevant documentation on Vertex to fully comprehend the instruments you are trading and the prevailing risks involved.
Money Markets
Decentralized money markets allowing for the borrowing and lending of crypto assets have been a widespread success in DeFi. Typically, they use overcollateralized lending rules to secure yields and lend to users without the need for intermediaries such as banks.
The prevailing interest rates for assets are set by smart contracts, creating predictable market behavior.
Blitz integrates money markets directly into the DEX on Blast. Users can borrow spot assets automatically using their portfolio margin to secure loans. The money market’s smart contracts are contained on-chain (e.g., on Blast) and housed within the Blitz risk engine and clearinghouse.
Interest Rates
Depositors are the liquidity providers (LPs) to the pool, earning a proportional share of the prevailing interest rates paid by borrowers – presenting a mechanism for passive yield on deposits.
Blitz users automatically earn interest on their deposited, idle assets.
The money market enables borrowing/lending for a specific asset at the prevailing interest rate in the pool – with interest rates a function of both the demand to borrow and the liquidity of the asset pool.
Blitz uses a dynamic interest rate model that adjusts to real-time demand in collateral pools.
Borrowers refer to spot margin borrowers, which are different from users going long or short perceptual products with leverage.
Technical parameters of Blitz’s money market include:
Collateralization:
Collateralization is a crucial parameter to ensure that the lending process is safe and secure.
Borrowers must provide a certain amount of collateral in crypto assets, which must be maintained at a predetermined minimum level during the loan period. This collateral is held in a smart contract until the borrower repays the loan.
Dynamic Interest Rate:
The interest rate in a decentralized money market is determined by the supply and demand of assets. A dynamic interest rate is necessary to support healthy borrowing and lending.
The interest rate is determined by an algorithm that considers the current market conditions and adjusts the rate accordingly.
As more borrowers enter the market and loan demand increases, the loan’s interest rate will rise. Similarly, if there are more lenders than borrowers, the interest rate will decrease to incentivize more borrowing.
An algorithm that considers the current supply and demand of assets in the pool determines the dynamic interest rate.
The dynamic interest rate calculations for Blitz’s integrated money market are expressed below.
Spot Rates
For each spot product, there are four attributes:
small_cap
large_cap
floor
inflection
borrow_rate and deposit_rate calculated according to the market parameters, and utilization ratio on average every 15 minutes.
Protocol fees are represented by a global attribute called interest_fee, and the value is 0.2 for now.
Parameter Definitions:
r is the utilization ratio
Small_cap is the peak interest rate in the first part of the utilization curve.
Large_cap is the peak interest rate at 100% utilization.
Floor is the minimal rate for borrows.
Inflection is the utilization rate where the interest rate curve steepens.
Interest_fee is the protocol fee taken from the borrow / lending markets.
Calculations for borrowing and depositing are then computed as follows:
borrow_rate is defined below:
deposit_rate is defined below:
Automated Loan Management: To ensure that loans are managed automatically, smart contracts are programmed to execute based on predefined rules and conditions. If a borrower fails to maintain the required collateral level, keepers will liquidate the collateral and use it to repay the lender. On Vertex, loan management is rolled into the cross-margin function associated with each subaccount – making loans easier and more efficient to manage.
You can find details on aspects related to managing open borrow positions in the sections below:
Available money market pools on Blitz for borrowing / lending spot assets currently include:
USDB
wETH
Single USDB Deposit Rate for Blitz Money Markets
Powered by Vertex Edge
One of the flagship product features of the Blast L2 network is that it’s the only Ethereum L2 with native yield for ETH and stablecoins. Derived from a combination of yield across ETH staking and RWA protocols, the aggregate yield is passed onto Blast users at projected rates roughly equal to:
4% for ETH (via staked ETH on Lido)
5% for stablecoins (via MakerDAO’s on-chain T-Bill protocol)
03/11/2024: A recent yield update to MakerDAO has temporarily increased native USDB yields on Blast from 5 -> 15%.
ETH natively rebases on the Blast L2, and so does USDB — Blast’s native stablecoin that’s redeemable for USDC when going from Blast to Ethereum L1. Moreover, net gas revenue of the L2 is distributed back to dApps on the network — providing a source of gas subsidies or boosted yields on deposit rates.
How does this apply to Blitz?
Vertex Edge enables a single USDC deposit interest rate across all Vertex Edge instances, such as Blitz.
This allows capital to flow freely between ecosystems, promoting the active use of capital where it can be best put to use and generating cheap loans for the most active traders paired with optimized yields for passive allocators.
Native rebasing yield on Blast is automatically incorporated into the single USDC deposit rate across all Vertex Edge instances — meaning:
The native yield from Blast supplements the USDB & USDC deposit rate for users not just on Blitz, but across all future Vertex Edge instances.
03/11/2024: Native yield supplement detailed above across both Blitz and Vertex will go into effect after the initial Blitz launch. Stay tuned to the Blitz & Vertex socials for more details in the coming days.
This is an important distinction for Vertex Edge that draws in capital from other ecosystems, where it extends a unique feature of a connected Edge chain, Blast, to the advantage of all USDC depositors on non-Blast instances of Edge.
In summary, increased usage of Blitz is value-additive to Vertex on Arbitrum and all future Edge instances on other L1s / L2s. Mutually beneficial relationships between EVM protocol and app layer are solidified with synergistic liquidity binding supported chains together under an alliance of EVM alignment.
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