In this article, we are going to take a look at Linear Finance, a decentralized delta-one asset protocol that ensures a faster and more affordable exchange of synthetic assets.
What Is Linear Finance?
Founded by Kevin Tai and Drey Ng in 2020, Linear Finance is a non-custodial, cross-chain compatible, delta-one asset protocol built on both Ethereum and Binance Smart Chain. It enables users to create, manage, and trade synthetic assets, allowing for exposure to a variety of financial assets without the need to acquire those assets directly.
The project aims to solve some of the main issues other DeFi projects experience, such as slow transactions and high transaction fees.
Combining experience from crypto projects with knowledge from traditional global asset management firms, the team behind Linear Finance created a delta-one asset protocol that enables traders to get the true value of the underlying asset as a result of the “one-on-one” relationship.
What this means is that, since delta-one products are derivatives with no options contracts, any move in an asset’s price will subsequently have an identical move in the synthetic asset’s price.
Linear is one of the first DeFi projects built on Ethereum that ensures cross-chain compatibility, as even if it takes advantage of Ethereum’s infrastructure, it uses other blockchains to create and swap Liquids, which leads to higher throughput and lower transactions costs than many other Ethereum-based exchanges.
Speaking of liquids, this is one of Linear’s main innovations. Liquids refer to synthetic assets that a user can create, trade, and manage with zero slippage, and since they can represent a variety of assets, such as commodities and spot cryptocurrencies, investors can build their portfolios with exposure to various products.
The interactions involving the different tokens that are associated with Linear Finance occur through its apps, namely: Linear Buildr, Linear Swap, Linear Exchange, and Linear Vault. So, the project offers services for staking, an exchange to buy/sell synthetic assets, as well as cross-chain swap functionality.
Linear’s main benefits and features include the following:
- Fast transaction and low transaction fees – as a result of the cross-chain compatibility ensured.
- Faster prices – Linear enables users to refresh prices at a much higher frequency and much lower rates with the help of oracles.
- Governance – the native token is LINA, and those who hold it can vote on the listings of synthetic assets, oracle selection, distribution models, and so on.
Kevin Tai, the co-founder and CEO of Linear, graduated from UC Berkeley and worked on collateralized debt and structured products for banks such as Credit Suisse.
Drey Ng is also a co-founder and the CTO of Linear Finance. He has a master’s degree in computer science and work experience in trade finance at Deutsche Bank.
Linear Finance’s Competitors
Given the advantages of synthetic assets, more projects are focusing on providing services involving them. A few such projects are Octopus Protocol, MarsSwap, and Synthetify, which are synthetic asset exchanges. However, Linear Finance’s main competitor is Synthetix.
Founded in 2017, therefore benefitting from a greater experience in this sector, Synthetix is another Ethereum-based protocol for the issuance of synthetic assets which, just like Linear Finance, uses decentralized oracles. However, according to the project’s founder, Drey Ng, Linear comes with several advantages.
First of all, it ensures cross-chain compatibility which provides DEX users with a complete solution to the problems of expansion and high transaction costs. Then, it combines this cross-chain compatibility with delta-one products, which turns it into the first and only known project to offer such features.
Just to help you get an idea of what makes Linear Finance score points, let’s take a look at the TPS ensured by the two protocols. While Synthetix with Layer 2 ensures between 100-500 transactions per second, Linear offers up to 1000 TPS on BSC (Binance Smart Chain).
Moreover, Linear’s UX/UI is easy to use, which plays a huge role in its adoption and in truly achieving its goal to democratize access to investment assets (both digital and traditional) without slippage and settlement time.
Linear Finance – Events & Roadmap
Before launching, Linear Finance held several private and public sale rounds, raising nearly $2.4 million from investors such as Alameda Research, Hashed, Huobi Global, and Vendetta Capital.
It entered partnerships with various projects, including Hashed, Moonbeam, and Band Procotol, launching the testnet of its exchange last year which became fully functional on the mainnet in January 2021 along with Linear’s Buildr app.
Since then, Linear has introduced several new features, such as perpetual contracts on its exchange service and liquids mimicking traditional market assets, as well as protocol upgrades.
According to an announcement made at the beginning of October 2021, the project is one step closer to the implementation of the Linear DAO as it recently finalized the structure of the Linear governance model.
Based on the project’s roadmap, the last quarter of this year should bring new DeFi functionality and non-EVM chain compatibility, which is likely to bring greater adoption.
Linear’s utility token is LINA, with a maximum supply of 10 billion coins and a circulating supply of 4 billion. At the time of our research, it had a market cap of $215 million and a price of $0.05. The token can be used for staking as the base collateral for Liquids and governance.
Linear provides a convenient platform for investors to easily and quickly build and manage a portfolio of exposures to both digital and traditional products while saving on fees. Despite its innovative features, Linear still has a few important steps to take in terms of adoption, which is always a challenge with a new or relatively new exchange.
Still, if the team does manage to foster greater adoption, Linear has the potential to become a household name among traders, which could also increase the value of its token.
What do you think about Linear Finance? Could it be a serious competitor for Synthetix? Let us know your thoughts on this in the comments section.