Introduction
2min
Kvadrat is a perpetual swap-like instrument that provides its buyers with a squared exposure to Bitcoin movements, serving as an alternative to options. Kvadrat gives pure tzBTC² exposure, (pure convexity, pure gamma) without the need for either strikes or expiries and any additional delta exposure.
| Option | Leveraged Long | Kvadrat |
|---|---|---|---|
Payoff | Mix of Linear and Convex Linear Convex | Linear | Convex |
Liquidation Risks | None | Present | None |
Costs | Premium | Interest | Funding |
Perpetual/Finite | Finite | Perpetual | Perpetual |
Kvadrat grants you a Squared Exposure to tzBTC (Bitcoin) Price Dynamics!
- Simple, unified exposure: no need to manage options/perpetual futures with various strikes and maturities
- Avoiding the liquidity fragmentation: as we don't have trading across different option chains and futures contracts liquidity is concentrated in the Kvadrat token (kvBTC), which allows Kvadrat users to have lower execution costs and higher trading speed
- Pure Convexity: As Kvadrat gives you tzBTC Squared exposure, your gains grow exponentially with the growth in price of tzBTC (essentially Bitcoin) but the lower the price goes the less you lose! This return asymmetry makes Kvadrat very attractive if you want a long tzBTC exposure with a low downside but a large upside!
- Configure your own yield profile: You can combine long tzBTC² exposure of Kvadrat with a Liquidity provision for tzBTC²/tzBTC pair (LP), short and earn fees on LP, create hedged Liquidity Baking exposure with Kvadrat and so on. There are many ways to create a strategy that fits your risk-return profile!
