About Variational
Last updated
Last updated
Variational is a protocol that provides infrastructure for peer-to-peer trading, clearing, and settlement of perpetuals and generalized derivatives. The Variational Protocol enables safe and efficient bilateral trading of options, futures, perpetuals, and more. Multiple apps have been built on the Variational Protocol, including Omni for perpetuals trading and Pro for institutions to trade customizable derivatives.
In 2021, Lucas and Edward (the two co-founders of Variational) left one of the largest market making desks in crypto to start their own firm. Over the next two years, they integrated and provided liquidity on nearly every leading CEX and DEX in crypto. They realized there were still major gaps in the market, specifically:
Existing platforms leaked significant value to external market makers, leading to a constant flow of funds from retail traders to market makers.
Existing platforms were limited in the markets they can support, and overly reliant on external market makers for new listings.
Institutions still trade manually; most OTC and customized derivatives trading happens through Telegram groups with post-facto settlement.
In 2023, Lucas and Edward decided to use their years of experience integrating with trading platforms and running market making strategies to build the Variational Protocol. The Variational Protocol is designed to support a variety of different applications on top of it, including Omni (a closed-loop perps trading platform for retail traders with no external market makers) and Pro (platform meant to streamline institutional OTC and derivatives trading).
Our first app is Omni, a platform for trading leveraged perps on hundreds of underlyings with zero fees. Our mission with Omni is to build the most user-friendly trading experience in crypto.
: Omni charges no fees on any orders. The only fees on the platform are a 0.1 USDC fee for each deposit or withdraw to protect against spam. This is only possible due to Omni's unique design where the Omni Liquidity Provider is the counterparty to each trade on Omni.
: Omni has hundreds of markets listed on mainnet, with more added daily via our automated listing process. Omni is also able to independently list perps for exotic markets like volatility indices, RWAs, interest rate swaps, and in-game items due to Omni's in-house quoting algorithms and lack of dependence on external market makers.
: The Omni Liquidity Provider accesses liquidity from CEXs, DEXs, DeFi, and OTC channels to offer the tightest possible spreads on each listed market. Omni's RFQ-based design unlocks immediate liquidity for each newly listed asset.
: Each user on Omni has their own on-chain settlement pool (smart contract) that both the user and OLP deposit funds into. This design isolates risk by user, avoiding the potential for socialized losses or platform-wide contagion, even when dealing with volatile or illiquid assets. Omni also maintains a variety of risk limits to protect itself from market manipulation and toxic flow.
: Deposits to the Omni Liquidity Provider will be open to all users, allowing them to receive yield from its market making activities on the platform. OLP is not risk free — it is a sophisticated market making strategy that can experience both gains and losses.
Just like traditional finance, the majority of trading volume in crypto happens via OTC derivatives trading. However, existing flows of OTC derivatives trading are extremely manual and inefficient.
During their time at both their own fund and the leading market making desks in crypto, Lucas and Edward saw firsthand the inefficiencies that exist in institutional OTC and derivatives trading. Trades are commonly booked via Telegram chats and other informal channels, then manually settled retroactively.
Our mission with Pro is to eliminate these inefficiencies and drastically streamline institutional OTC and derivatives trading.
Pro automates the entire flow of institutional trades — from booking and clearing to settlement — and brings it on-chain. Institutions can create completely customized derivatives, set specific margin and liquidation rules, use the Variational Oracle for pricing. Variational Pro is being built as the product that Lucas and Edward wished existed while processing hundreds of billions in institutional volume at their previous roles.
The thesis of Pro is simple:
Institutional derivatives trading currently happens either in direct channels (e.g. Telegram groups) or on platforms like Deribit.
Direct channels are extremely manual and inefficient.
Pro can offer the same level of customization as direct channels while providing the efficiency of automated, on-chain clearing and settlement. Pro creates a more efficient and comprehensive trading experience for institutions.
Variational is backed by industry leaders, including Bain Capital Crypto, Peak XV (formerly Sequoia India/Southeast Asia), Coinbase Ventures, Dragonfly, Hack VC, North Island Ventures, Caladan, Mirana Ventures, Zoku Ventures and more.
Platforms like Deribit lack customization and only support options on majors (BTC, ETH), yet still process .