Rage Trade

Derivatives

Rage Trade is a decentralized derivatives trading platform that allows users to provide liquidity provider (LP) tokens of other protocols as liquidity for perpetual traders.

Risk Rating
Average
Protocol Code Quality
Protocol Maturity
Protocol Design
Summary
What we like
Rage Trade aims to become the most liquid and composable ETH perpetual by leveraging Uniswap V3 vault strategies that utilize underutilized liquidity provider (LP) tokens.
What we like less
The platform currently only offers up to 10x leverage and only one asset (ETH) which is far less than competitor offerings.
What it means for you
Offers you a great way to earn additional yield from perpetual trading fees on your underutilized LP tokens.
Information
Info
Key Metrics
  • TVL: $741.5K (Rank #193)
  • TVL Ranking by Derivatives: #0
  • Blockchain: Arbitrum
  • Chain TVL
    • Arbitrum: $741.51K
Risk Assessment
Average
Protocol Code Quality
  • Code reviewed by several experienced auditors including Quantstamp and PeckShield
  • Anonymous team reduces transparency
  • No documented protocol hacks since launch
Protocol Maturity
  • Latest protocol version launched in 2022; maturity over one year minimizes technical risk as smart contracts are well battle-tested
  • Bottom 80% by total value locked increases risk
  • Multisig wallet controls protocol upgrades
  • Multisig consists of less than 4 signers, which makes the protocol more susceptible to centralization risks
  • Timelock is at least 48hrs, which provides users with sufficient time to exit if any malicious upgrades are approved
  • No governance token and/or contracts are fully immutable
Protocol Design
  • No death spiral concerns
  • Solid controls to prevent oracle price manipulation
  • This protocol is susceptible to risks related to decentralized derivatives, such as LPs serving as the counterparty for all platform traders
  • Quickswap is a direct fork of Uniswap V2 implemented on the Polygon PoS chain.
Things to know about Rage Trade

How Rage Trade works

Rage Trade is powered by Uni V3 using a virtual Automated Market Maker (vAMM) design. The Uni V3 vAMM pool holds virtual tokens (vETH-vUSDC) that are synthetic representations of underlying tokens in the spot market (ETH-USDC). Traders and LPs use virtual tokens to place orders on the vAMM. Additionally, Rage uses a funding rate mechanism to ensure the platform's funding rates match centralized exchange rates. Omnichain recycled liquidity allows Rage to re-use LP tokens across chains and protocols to provide liquidity into the platform's ETH perp. Rage uses LayerZero technology to pass messages to/from chains, while Stargate is used to bridge USD profits and losses (PnL) to/from the vaults. These LP tokens are deposited into the 80-20 vaults, which keep 80% of the TVL in the initial yield-generating service (isolated risk) and 20% of TVL to provide concentrated liquidity on Rage. The goal of these vaults is to earn additional yield on top of these LP tokens while replicating the payoff of an ETH-USD LP in Uniswap V2 (similar impermanent loss to Uni V2).

The initial state of the vault is 100% in a yield-generating LP position (outside of Rage), while the vault deploys a concentrated liquidity position around the current price with an equal amount of vETH and vUSDC. As the price of ETH moves, the LP vault accumulates directional perp positions. For example, as the ETH price increases, the vault becomes short ETH perps. The rebalance operation realizes the PnL from the perp position and transfers the assets to/from the yield-generating LP. As the price of ETH moves, the concentrated liquidity position may hold an imbalance of vETH and vUSDC. A smart contract will update the range once per day by withdrawing the current range order and deploying a new range with equal parts vETH and vUSDC centered around the new price. When the ETH price moves significantly, a large perp position will be accumulated in the vault. Once this positions size exceeds 20% of the vault's value, the reset liquidity operation closes the vault to manage risk and the liquidity will be returned to the initial stated based on the new vault size.

How Rage Trade makes money

Rage collects 0.15% of each swap with 0.1% going to liquidity providers (LPs) and the remaining 0.05% going to the protocol. The protocol fees are collected across markets and sent to a team address.

How you make money on Rage Trade

You can make money by placing directionally levered bets on ETH. If you have a more long-term view, you can earn a portion of all protocol generated revenues from staking LP tokens. The fee split is currently 2/3rd paid to LP stakers and the remaining 1/3 paid to the protocol.