🚙Utilisation Types

Fractality uses various tools and instruments for yield and hedge purposes.

Decentralized Exchange (DEX) for Providing Liquidity (LP) A Decentralized Exchange (DEX) is a platform where users can trade cryptocurrencies directly with one another without relying on a centralized authority. To facilitate trades, liquidity providers (LPs) contribute pairs of assets (e.g., ETH and USDT) into liquidity pools. These pools enable smooth trading by ensuring that there is enough liquidity for users to swap assets with minimal price impact (slippage). In return for providing liquidity, LPs earn a share of the transaction fees generated by trades within the pool.

Perpetual Exchange Platforms for Providing Liquidity (LP) Perpetual exchange platforms allow for trading perpetual contracts—derivatives that do not have an expiration date. Liquidity providers (LPs) on these platforms supply collateral to liquidity pools, which supports the leveraged trading activities of other users. By providing liquidity, LPs help maintain the stability and availability of perpetual contracts, ensuring that traders can open and close positions efficiently. In return, LPs earn a portion of the fees generated from trading activities on the platform.

Lending/Borrowing Platforms for Lending Lending and borrowing platforms enable users to lend their assets to others in exchange for earning interest. These platforms are typically decentralized and use smart contracts to manage lending and borrowing activities. Users deposit their assets into the platform, and borrowers can take out loans by providing collateral. The interest earned by lenders depends on the demand for borrowing that particular asset, offering a way to generate passive income.

Holding Spot on a Centralized Exchange (CEX) Holding spot on a Centralized Exchange (CEX) means owning the actual underlying cryptocurrency assets, such as Bitcoin or Ethereum, on a centralized platform. Unlike derivatives, spot holdings represent direct ownership of the assets. CEXs provide custodial services for asset security and sometimes offer additional features such as staking or earning interest. Spot holdings can be used for trading, collateral, or long-term investment strategies.

Fractality does not ensure that all the mentioned instrument types are used at any given time nor limits itself to the mentioned tools in its documentation.