Injection protocol, one Second-tier derivatives platform, Today announced the establishment of a new strategic partnership with Lithium Finance to launch decentralized pre-IPO stock derivatives. Lithium is an oracle that aims to use collective wisdom to price non-current assets on a regular basis.
The Determinant Mutual Information (DMI) mechanism facilitated the lithium proposal. This method enables participants to request pricing for specific private assets; at the same time, it incentivizes and rewards pricing providers who provide true and accurate answers. Similarly, the DMI mechanism punishes those who provide inaccurate information.
A basic use case of the technology stack is to price private market assets that have not yet been actively traded. For example, for now, you will not be able to accurately understand SpaceX’s stock price because the stock is not yet listed. If a user on Lithium wants to know the value of SpaceX, he will post questions on the platform and pledge Lithium tokens. Lithium will use a proprietary algorithm to vote on the expert community. If their answers are determined to be high quality, they will have an incentive to win Lithium tokens, and if the answers are determined to be low quality, they will be lost. Therefore, Lithium is able to price assets that are not available to non-industry players.
Decentralized pre-market derivatives
Injective currently provides access to many different oracle providers, such as Chainlink, Band Protocol and API3The addition of lithium allows the Injective Protocol to increase the number of available markets.
Using Lithium’s price oracle machine, Injective users can create new derivatives markets for private companies. Therefore, the Injective exchange agreement will be able to support futures and perpetual contract transactions in private market transactions that cannot be conducted anywhere else. Traders will use Injective’s governance module to create a new market for non-listed companies.
“Lithium will become an important supplement to our oracle module. Because it will allow our users to discover new private markets with poor liquidity, otherwise these markets will not be able to enter. Our cooperation will help reduce the hope of being completely decentralized. Entry barriers for users entering the new private market.”
– Eric Chen, CEO of Injective Protocol
When trading in these new markets, Injective users can also enjoy the additional benefits of avoiding gas fees and fast transaction times. Combining the advantages of Lithium’s on-chain pricing oracle and Injective derivative products, both teams will work to introduce pre-IPO derivatives into the DeFi field.
“The main focus of Lithium Finance is to price unpriced assets in a timely and accurate manner. We are pleased that Injective agrees with this view and makes Lithium part of the oracle module to help price private and illiquid assets. We believe in this The partnership will help make private assets more accessible, which is an important step in bringing real assets into the DeFi space.”
– David Lighton, co-founder of Lithium Finance