Daxia now gives you a way to go “long” or “short” crypto prices using tokens on the Ethereum network. For those of you who aren’t familiar with those terms, think of being long as a position where, if the price goes up, you make money and being short as a position where if the price goes down you make money. The traditional way of being long an asset would be to simply own it. But, with Daxia’s Long and Short tokens you can go long or short an asset without owning it.

This is revolutionary for the decentralized exchange ecosystem.

Instead of only being able to trade standard ERC20 tokens, you can now have exposure to the short side of price movements, multipliers (e.g. 5x, 10x contracts), and even off-chain assets (BTC, Doge, XRP) all as ERC20 representations of their price movements.

With our mainnet product launched, user and partner feedback is that the week long contracts are still a lot of work. Parties want to enter into a Long or Short token and not have to worry about redoing it every week to keep their position going. If only there was a third party to roll them forward for us…just kidding. We wanted a completely decentralized option and that’s where Set protocol and their brand spanking new rebalancing token comes into play.

What is Set

Set protocol is a standard interface for a collateralized basket of ERC20 standard tokens. To translate, they give you one token that represents a basket of other tokens. Similar to Daxia’s contracts, its an ERC20 token that represents a stake in a smart contract.

This is really cool in and of itself, but the even cooler side of the pillow is the new rebalancing token set.

Rebalancing is the process of realigning the weights of a portfolio, which involves periodically purchasing and selling assets to maintain a certain asset allocation. In the traditional finance world where users purchase Index Funds or ETFs, fund managers would perform the rebalancing on behalf of users with minimal input from the end user.

Luckily for Daxia and the rest of the decentralized revolution, Set has devised a system that allows a user to own a Rebalancing Set that rebalances trustlessly.

A new user can get exposure to a Rebalancing Set by simply purchasing a token on an exchange or by minting a Set themselves. No action is required by the user to participate in the rebalancing. Only if the user decides to opt out, does the he or she need to get involved. This allows users to passively invest in ERC20 tokens in a fully decentralized manner.

Enabled Products

Baskets are cool. But now that they can hold Daxia Long and Short tokens, you can create a whole new class of baskets. Below are just some of the products that become possible with Set and Daxia.

Automatically rolling contracts (single address for front-week short or long token)

The first product is one that solves Daxia’s initial problem head on. To give you an example, we will create a Set that has a short token expiring in one week (token (t)) and one token that starts in one week (token(t+1)). In 7 days, we will initiate the rebalance and trade week long token(t) for week long token(t+2). We have now rolled the exposure of our token forward using the rebalancing mechanism. The party holding the token representative of this basket will now have a ‘short’ token that they don’t have to worry about rolling forward.