Avantis Launches Perpetual Swaps Exchange on Base Network, Offering a New Approach to Crypto Futures Trading

Avantis, a perpetual swaps exchange, has recently opened for trading on the Base mainnet, offering a new approach to balancing crypto futures markets. The platform aims to attract retail traders by providing a unique trading experience. Base, a layer 2 solution backed by Coinbase, hopes to leverage its proximity to the centralized exchange giant to bring millions of first-time DeFi users into the on-chain world.

While it may seem unlikely that retail traders would immediately engage in high-risk leverage trading, Avantis saw significant interest during its two-month testnet phase. The platform generated over $5 billion in trading volume from 50,000 wallets, according to a press release.

Perpetual swaps, a financial novelty exclusive to the crypto market, are essentially futures contracts without an expiration date. Traders can hold their positions as long as they have sufficient collateral. However, these markets require maintenance to ensure that the futures contract’s price remains aligned with the underlying asset’s value. Funding rates, which represent the fees paid between buyers and sellers, play a crucial role in keeping the Open Interest in check.

Avantis CEO Harsehaj Singh highlighted the challenge faced by retail traders in accessing the Open Interest game, as professional market makers often arbitrage away any funding rate opportunities. To address this issue, Avantis offers a different approach. Instead of relying on funding rates, the platform provides a guaranteed rebate to traders who take contrarian positions. For example, if most traders believe a token’s price will rise, Avantis incentivizes those who bet on a price drop. While this trade carries inherent risks, the platform promises to partially compensate traders for their losses.

Singh emphasized that Avantis is designed for traders who exclusively engage in directional trading. The platform aims to provide a unique trading experience for retail traders, differentiating itself from the professionalized DeFi and CeFi markets.

The opening of Avantis on the Base network marks an important milestone in the crypto trading landscape. As the platform attracts retail traders with its innovative approach to perpetual swaps, it will be interesting to see how it competes with other established players in the market.