Overlay Protocol has just come out of stealth mode to reveal how the DeFi project plans to enable the trading of data streams without the need for individual counterparties.

Overlay empowers DeFi users to trade nearly any data stream, long or short, with leverage, using price oracles and a native token (OVL). In V1 of Overlay (launching in May 2020), the focus will be on DeFi token price feeds. The initial version of Overlay will help users to hedge their price exposure to DeFi tokens on-chain.

How Does It Work?

By replacing the liquidity problem faced by prediction markets (Augur) and derivatives protocols (SNX) with a local inflation problem, Overlay aims to recreate the dynamics of trading without the need for any single counterparty. Instead, passive OVL holders act as the counterparty to all unbalanced trades in the Overlay market.

OVL will not have a fixed supply as trader’s profit and losses will be settled by minting & burning OVL tokens dynamically. Various caps & fees will be introduced to the protocol in order to manage the unbalanced trades in the market.

Unlike many DeFi projects in a similar design space, Overlay has opted for a one token model. Since all profit/loss is denominated in OVL and OVL also serves as the governance token of the protocol, this gives successful traders on Overlay even more skin in the game.

Overlay’s mission is to be the go-to platform offering investors, hedgers, and speculators the ability to turn streaming data sources into financial instruments.


What’s Next?

Overlay is hiring senior web3 developers and aiming for beta launch in May 2020. The team has hinted that additional announcements regarding OVL tokenomics and strategic investors will be shared soon as well.

To keep up with Overlay, follow their Twitter or join them on Telegram.