Concrete Protocol

An automated working capital distribution mechanism for users and protocols when market volatility generates liquidity demand shock. This process is enabled by a series of quantitative methodologies that generate credit derivatives against long-only structured products in DeFi.The capital is funded by liquidity providers (funders) who purchase the policies/contracts generated by the protocol.

In short:

  • We use quantitative methods to underwrite the probability of a downside or a liquidation event.

  • We sell contracts to leverage holders providing access to a fixed credit line.

  • There is a small upfront fee to purchase the policy, and interest is applied to the credit once used.

  • Credit is automatically deposited from Concrete's liquidity pools into the position before the user is liquidated.

  • Should the user default or reapproach the liquidation threshold despite the additional capital issued through Concrete, the protocol will foreclose the position and claim owed fees.

  • At scale, we afford the creation of custom downside protection markets leveraging the underlying Concrete mechanism where peer-to-peer bids and rate setting can be dynamically adjusted.

  • Enabling participants to synthetically short assets by enabling a mechanism that increases efficiency in the market.

To enable this, Concrete must:

  1. Quantify temporal asset, market, and position probable downside.

  2. Generate contracts enabling the facilitation of deposits and active position management between Concrete and third partner protocols.

  3. Price and synthesize the protective agreements.

  4. Actively manage, rebalance, and reprice the aggregate exposure that positions create for holders and issuers of protective capital.

  5. Integrate and scale a highly utility-focused tokenomics model.

To Scale

  1. Drive volume through the Concrete platform as a stand-alone and embedded solution

  2. Continuously optimize the data-centric approach to parameterized pricing structuring

  3. Incentivize long-term stakeholdership for users and token holders

Challenges

  1. Crypto is a highly volatile asset class with strong beta

  2. Data availability and market depth require creative mechanisms and custom tooling to improve accuracy

  3. The protocol must offer economic value to stakeholders to outshine the perceived market rate of return

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