Overview

How does Drake work?

Drake operates on a peer-to-pool liquidity model, where liquidity providers deposit USDC into a central vault that serves as the counterparty to all trades on the platform. This model ensures that the platform has the necessary liquidity to support leveraged trading while providing liquidity providers with opportunities to earn revenue. Drake guarantees genuine liquidity that is resistant to malicious manipulation and fully transparent, setting it apart from centralized and off-chain order book models.

• Liquidity Providers: Users who deposit USDC into the liquidity vault contribute to the pool that acts as the counterparty to every trade. In return, liquidity providers earn revenue from trading activity on Drake.

  • All trading pairs utilize the USDC vault as the counterparty

  • Open interest and trading volume can scale more effectively than traditional order book models

  • The unified USDC vault generates significantly higher yields compared to models that rely on multiple liquidity pools for different trading pairs

• Traders: Traders can deposit collateral in the form of USDC, ETH, or BTC, with plans to support additional assets in the future. When traders open a leveraged position, they borrow USDC from the liquidity vault to increase their market exposure.

  • Seamless onboarding via Email, Social, and Embedded Wallet logins

  • Gas-free trading via Coinbase Paymaster

  • Complete self-custody

    • Cross-margin and isolated-margin accounts are smart contracts owned by the user's main wallet, Drake cannot access any user funds

Revenue Streams for Liquidity Vault

The liquidity vault generates revenue from the following sources:

• Trading Fees: Fees collected when a trader opens a position contribute directly to the vault’s earnings. The default fee when opening a trade is 0.1%.

• Borrowing Fees: Traders pay fees for borrowing USDC from the vault to leverage their trades.

• Trader Losses: When a trade is closed at a loss, the negative PnL is added to the vault’s balance.

Trade Settlements

• Profitable Trades: If a trader closes a position in profit, their PnL is paid out from the liquidity vault.

• Losing Trades: If a trade results in a loss, the liquidity vault retains the negative PnL, increasing its overall balance.