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Understanding Strike Token
The Strike Tokens concept for AlphaX was coined and created by Alpha Finance Lab, so there are no same product offerings off-chain or on-chain. We believe that a DeFi-native product is needed to make derivatives trading skyrocket in DeFi, as it is in traditional finance.
With the Strike Tokens concept, AlphaX is designed to be very easy-to-use by any DeFi user and composable with any DeFi protocols on-chain.
To understand Strike Token, you only need to ask yourself two questions:
  1. 1.
    Are you bullish or bearish in that particular asset?
  2. 2.
    What do you think is the price floor (if you’re bullish) or ceiling (if bearish) of that asset? This price floor/price ceiling can be referred to as the strike price, and hence the concept name “Strike Tokens”.
Each kind of Strike Token will represent a combination of the two questions you asked.
There are 2 types of Strike Tokens on AlphaX. Each Strike Token gives you an exposure to 1 unit of that asset in a more capital-efficient way.

LONG Strike Token: Asset-X

  • ASSET represents the underlying asset price
  • X represents the price floor
For instance, 1 “ETH-1500” token represents a LONG token and gives you exposure to 1 ETH in a more capital-efficient way. You will buy this token if you want to long ETH and think that the ETH price will not decrease to $1,500 (hence the price floor) during the time that you want to hold the token.
Token pricing is a simple subtraction. For instance, ETH-1500 token is worth $3,000 - $1,500 = $1,500 (assuming ETH price is $3,000).

SHORT Strike Token: Y-Asset

  • ASSET represents the underlying asset price
  • Y represents the price ceiling.
For instance, 1 “4500-ETH” token represents a SHORT token and gives you exposure to shorting of 1 ETH in a more capital-efficient way. You will buy this token if you want to short ETH and think that the ETH price will not increase to $4,500 (hence the price ceiling) during the time that you want to hold the token.
Token pricing is a simple subtraction. For instance, 4500-ETH token is worth $4,500 - $3,000 = $1,500 (assuming ETH price is $3,000).
AlphaX is a platform to mint and redeem these Strike Tokens. Although users can easily buy and sell these tokens from AlphaX, the underlying trading activities take place on Trader Joe.

What is the difference between Strike Token and normal token?

Strike Token is a completely new term coined by Alpha Finance Lab.
Holding 1 Strike Token gives users the same exposure to holding 1 unit of the underlying asset with less capital required.

DeFi-native Approach to Derivatives Trading

  1. 1.
    Composable:
    AlphaX is composable with other DeFi products, offering even more profit and hedging strategies
  2. 2.
    Scalable:
    AlphaX can support any asset as long as there is a price feed
  3. 3.
    Easy to understand:
    There is no funding rate concept that users need to understand (exist in perpetual swaps) There is no rebalancing concept that users need to understand (exist in leverage tokens) Token price is easily derivable, as it’s a simple subtraction (e.g. ETH-1500 token price = 3,000-1500 = 1,500, assuming ETH price is $3,000)
  4. 4.
    Capital efficient:
    Buying 10 tokens of ETH-1500 gives user exposure to 10 ETH in a more capital-efficient way than buying 10 ETH on the market
⚠️ Strike Token is risky as it can be liquidated. Learn more about liquidation here.