A look at Aevo, an orderbook-style decentralized exchange (DEX) for options and perpetual contracts, launched by the team behind Ribbon Finance.
What Is Aevo? The Derivatives L2 Chain
The derivatives space has always been a tough market to target for DeFi protocols, with the difficulty in acquiring sufficient liquidity to create a sustainable and sufficiently efficient market for traders on-chain. Additionally, a poor user experience often leaves traders seeking the easier option of centralized exchange (CEX) trading. Top centralized derivatives exchanges like Binance are pushing over $80 billion in volume daily, while the total decentralized derivatives market sees around $10 to $20 billion in daily trading volume.
However, there are now numerous innovative derivatives protocols seeking to gain more market share. One of which is Aevo. The protocol offers a suite of DeFi products brought together in a synergistic manner to bring both liquidity and a user-friendly user experience to sophisticated derivative traders on-chain.
But before looking at Aevo, we must first dive into Ribbon Finance, Aevo’s predecessor.
What Is Ribbon Finance?
Aevo started its journey as Ribbon Finance, a structured products platform on Ethereum, Avalanche, BNB Smart Chain and Solana. Ribbon Finance specialized in options vaults where users earned yield from their assets derived from option premiums sold on the platform. This included vaults for popular assets such as stETH, RETH, USDC, WBTC, AVAX and many more.
Source: Ribbon Finance
At its peak, Ribbon Finance held more than $300 million in total value locked (TVL) in their vaults across their supported chains.
What Is Aevo?
First launched in June 2023, Aevo is a decentralized exchange (DEX) for options and perpetual contracts launched by the team behind Ribbon Finance. The exchange supports an off-chain orderbook style DEX with on-chain settlements, for options on BTC and ETH and perpetual contracts on a selected range of popular tokens with up to 20x leverage.
One of Aevo’s most popular products is its Pre-Launch Futures product, which enables users to trade and speculate on the value of upcoming token launches. This has driven a large amount of volume to Aevo, especially with the product covering some of the most hyped recent launches, including JUP, DYM, STRK, BLAST and many more. As these tokens eventually launch, the Pre-Launch Futures contracts convert to regular perpetual contracts to allow users to continue trading and speculating on the token prices.
Source: Aevo Twitter (link)
Another feature of Aevo which differentiates it from many other similar DEXs is its native yield-bearing stablecoin, aeUSD. When users deposit USDC onto Aevo, their deposit is placed with MakerDAO to generate yield. In return, they receive aeUSD, a yield-bearing stablecoin to trade with on Aevo. As such, even while users are not trading on the platform, they earn a yield of 4.75% annually on their stablecoin balances. This move alone attracted more than 20,000 new users to the platform, doubling its TVL in the same period.
Aevo currently holds just over $92 million in TVL and has processed $25.5 billion in trading volume on the exchange since its launch.
The Aevo Tech Stack
The Aevo exchange runs on Aevo’s own Layer-2 blockchain, an Ethereum Virtual Machine (EVM) compatible Optimistic rollup.
The Aevo L2 is built on the OP Stack by the Optimism team, while concurrently leveraging Celestia for its data availability needs. Due to the use of Celestia, the Aevo L2 has been able to significantly reduce fees for data storage, which are passed on to Aevo users in the form of lowered gas fees.
Source: Aevo Twitter (link)
While the Aevo exchange is currently the only decentralized application running on the chain, the Aevo team has announced plans to open the chain up to other developers in the future, as they seek to build an entire ecosystem around the Aevo exchange.
The Ribbon-Aevo Merge
In July 2023, the team announced plans for a merger between Ribbon Finance and Aevo, with both protocols being combined under the Aevo brand. This was passed shortly in a governance vote in a near unanimous vote by RBN token holders.
As part of the merger, Ribbon’s options will be settled on the Aevo exchange, driving consistent volume to the exchange. Besides fuelling the exchange with the required liquidity for option trading, the merger also enables more synergistic products to be designed and built on top of the new combined architecture.
The AEVO Token and Tokenomics
As part of the merger between Ribbon Finance and Aevo, existing RBN tokens will be converted to AEVO tokens at a 1:1 ratio. Additionally, RBN token holders who had originally staked their RBN as vote-escrowed RBN (veRBN) can now unstake without any penalties too.
Since the AEVO token is migrated from the RBN token, much of the tokenomics will remain the same. The largest holder of RBN is still the Aevo DAO Treasury. As part of the move towards the AEVO token launch, 45% of tokens in the treasury will be utilized as follows:
- Airdrop (up to 16%) - An airdrop will be distributed to reward users who participated in the Farming Program launched by Aevo in early February as well as before the launch of the program.
- Liquidity Management (up to 9%) - These tokens will be used to manage liquidity of the AEVO token on both decentralized and centralized exchanges.
- Community Growth (up to 5%) - Tokens will be used for community events as well as bounties.
- Future DAO Spending (16%) - This amount will be reserved for future expenses. Payments to the team will also come from this allocation.
Binance Launchpool and Token Launch
Binance announced the launchpool for the AEVO token on March 6, as the 48th launchpool project. Users can stake BNB or FDUSD in separate pools for five days to farm for AEVO tokens, with the pools opening on March 8. Once the pool closes on March 13, depositors will receive their respective token allocations from a pool of 45 million AEVO tokens, or 4.5% of the total supply. At the same time, the token will go live on the exchange for trading.
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