Since announcing our plans to build an L2 specifically designed for derivatives on July 16, we’ve received numerous queries from community members and developers seeking more information about our upcoming launch. We appreciate your interest and would like to take a moment to explain and answer questions about our development of a ‘native liquidity layer’ to support the future of on-chain trading through the Polynomial Chain.

Why is this Important You Ask?

• Capital Efficiency: By enabling future products to share the same liquidity, we ensure LP providers use their capital dynamically across various protocols and dApps built on our Chain. This approach prevents liquidity fragmentation across individual asset pools and enhances overall efficiency.

• Seamless User Experience: Users can provide liquidity to different financial products without moving assets between separate pools. This integrated approach simplifies the process, reducing both transaction times and costs.

• Enhanced Security and Trust: With natively integrated liquidity, our system is more secure and reliable. Users can trust that their assets are safe and efficiently utilized within our shared ecosystem.

How Does It Work?

Unified Liquidity Pool: The core of our native liquidity layer is a single, unified pool of liquidity accessible across various financial products, such as perps and prediction markets. This means the same pool can be used for different risk profiles and product types, providing flexibility and efficiency. In other words, an entire ecosystem - ranging from DEXs and lending platforms to synthetics, RWAs, and option markets can all build around a unified liquidity layer, bootstrapping infinite possibilities.

Asset Integration: Initially, our liquidity layer supports assets like USDC, sUSDe (Ethena - 5x sats boost), and sDAI. We plan to add fluid USD and other assets in the future, expanding the range of options for users as we continue to grow.

Delta-Neutral LP Strategy: Our first product, a cross-margined perps pool called 'Trade,' employs a delta-neutral LP strategy that was successfully used last year on Optimism (OP), garnering over $2.2 million in fees. This product exemplifies our vision for future applications built alongside ours and the successful deployment of other teams' products within our ecosystem. After three years of our team working on Optimism - and most recently as BASE -  we hope to inspire others to follow suit.

What Are the Benefits?

• Hyper Scaling Derivatives: Our native liquidity layer supports the hyper-scaling of derivatives by providing a robust and efficient liquidity pool enabling high-volume trading and the development of complex financial instruments that rival TradFi and CEXs.

• User Participation and Rewards: Select communities and users are allocated retro points, which they can claim by depositing into our pool. Our system incentivizes participation and rewards early adopters, fostering a vibrant and engaged community where active participants are greatly rewarded. (wink wink side eye emoji)

• Future Innovations: We are committed to continuously improving our liquidity layer and enhancing our chain by adding new assets and developing novel methods for fluid interoperability and composability across all of crypto, both present and future, that leverage our unified liquidity pool.

Conclusion

Polynomial Chain’s native liquidity layer represents a significant advancement in Ethereum L2 solutions. As we continue to innovate and expand, we invite you to join us in revolutionizing the future of decentralized finance through our shared vision of a Derivatives Superchain!

Stay tuned for more updates on our launch by following our upcoming blog posts at Polynomial.fi and follow us on X at https://x.com/PolynomialFi.