Aevo (AEVO): Enhancing Trading Efficiency With Off-Chain Matching

Trading crypto derivatives can be immensely profitable, but for many potential users, the complexities of typical decentralized trading platforms represent a significant barrier to entry. Most decentralized finance (DeFi) platforms specializing in derivatives use liquidity pools and automated market maker (AMM)-based setups. 

While this is a familiar environment to experienced crypto derivatives pros, traders who aren’t crypto natives often find these platforms confusing.

One of the key projects that helps make the transition to crypto derivatives trading much easier is Aevo^® (AEVO). Using a combination of secure, blockchain-based order settlement and the centralized order book model so familiar to many traders outside of the crypto world, Aevo offers a unique platform for diverse groups of derivatives aficionados, both crypto natives and newbies to the field. The central order book Aevo uses also closely mimics the trading system used at centralized exchanges (CEXs). 

With CEXs handling over 90% of overall cryptocurrency trading volumes, the Aevo platform represents a familiar and welcoming environment for many traders. Additionally, unlike Layer 1 (L1) blockchains, which are typically riddled with congestion and high fees, Aevo's Layer 2 (L2) rollup technology ensures the platform offers excellent transaction efficiency and low costs.

Key Takeaways:

• Aevo is an L2-based trading platform that offers diverse crypto derivatives products, including perpetual futures, options, strategies and yield-generating vaults.

• The platform combines off-chain, centralized order matching with on-chain settlement via its L2 protocol linked to Ethereum.

• AEVO is the governance and staking token for the Aevo platform. It can be bought on Bybit as both a Spot pair and a USDT Perpetual contract.

What Is Aevo?

Aevo (AEVO), originally known as Ribbon Finance (RBN) before its July 2023 rebranding, is a crypto derivatives trading platform that uses an off-chain central limit order book (CLOB) and blockchain-based order settlement. It provides traders with the familiar centralized order book format while also ensuring the security of trades via the use of the underlying blockchain environment, with a Layer 2 EVM rollup linked to Ethereum (ETH).

Aevo’s Layer 2 platform was built using OP Stack, an optimistic rollup development framework introduced by the popular Optimism (OP) rollup network.

Aevo operates as a comprehensive derivatives trading environment offering several key products. These include the CLOB-based exchange for trading perpetual futures, options and other derivatives products; different vault types to earn yield by applying automated strategies; and an over-the-counter (OTC) options trading platform for several popular cryptos.

How Does the Aevo Rollup Work?

Aevo employs a fast and efficient matching system that initially matches maker and taker orders off-chain before committing them to an on-chain environment. The off-chain order-matching mechanism includes a risk evaluation engine, which assesses margin eligibility requirements for a transacting account.

Following this off-chain matching, Aevo's optimistic rollup processes the matched orders through its smart contracts, aggregating transactions and transmitting them to the underlying Ethereum blockchain in batches. Integral to the Aevo chain rollup architecture is the sequencer node, a centralized entity responsible for transaction batching and communication with L1 validators. Operated by Conduit, a crypto infrastructure provider specializing in Rollup-as-a-Service (RaaS) products, Aevo's sequencer optimizes the batching process.

By leveraging L2 technology, Aevo can offer highly efficient, swift order settlement. Transaction blocks are confirmed on Aevo within an average of 10 seconds.

However, since the platform employs optimistic processing — which assumes that Aevo transactions submitted to the underlying Layer 1 are free from fraud, and sets a time window for raising potential fraud proof by validators — the deposition confirmation time takes approximately 10 minutes.

While the sequencer posts batches of transactions from Aevo Rollup to Ethereum Mainnet every hour, the dispute period for transactions is two hours, which means it might take two to three hours for withdrawals to be confirmed. This is significantly faster than the Optimism Mainnet dispute period, which takes up to seven days, which isn’t optimal for exchange transactions.

Aevo Exchange

The Aevo Exchange is the central part of the overall platform. While relying on Aevo’s decentralized backbone, the exchange uses the CLOB order matching system, as described above. The CLOB model is akin to the typical setup at a CEX. With 94% of crypto trades occurring on CEXs — in contrast to decentralized exchanges (DEXs) — as of March 2024, Aevo’s CLOB is a familiar environment for many traders.

Perpetual futures and options are the main derivatives products available for trade via the Aevo exchange. 

Aevo Vaults

Aevo also offers several “vault” types, which are smart contract–based solutions that earn yields via the application of automated derivatives strategies. Among these, Theta Vaults and Earn Vaults are the primary types.

Theta Vaults

A Theta Vault allows you to execute a European-style put or call option, with the option contract settled every week. The key difference between European and American options is that the former can only be settled at expiration, while the latter can be exercised at any time before expiration. In the case of Theta Vaults, the contract is settled exactly on the expiration date, which, for European options, is seven days after the vault setup.

Earn Vaults

An Earn Vault is designed for strategies that combine lending and exotic options with exposure to short-term volatility in the market, which can potentially boost yields. Earn Vaults also offer principal protection.

This type of vault can be used as a complementary product to a Theta Vault, potentially delivering better overall yields.

Aevo OTC

Aevo OTC is an altcoin options trading solution against institutional-grade liquidity providers that’s based on the request-for-quote system. There are currently 13 cryptocurrencies available for options trading via Aevo OTC. These include the majority of top cryptos (BTC, ETH, BNB, SOL and DOGE), as well as a number of other popular tokens (APT, LDO, SUI, OP and ARB).

What Is the AEVO Crypto Token?

AEVO is the Aevo platform’s new native cryptocurrency, launched on Mar 13, 2024, for its token generation event (TGE). This is being accompanied by an airdrop campaign, with early users who provide volume to the platform eligible to receive free AEVO tokens.

AEVO acts primarily as a governance and staking asset. When you stake AEVO, you’ll be issued sAEVO, a staking representation of the AEVO token that gives you greater governance rights on the platform. sAEVO holders have twice the voting power of AEVO token holders, and can make new voting proposals to influence the platform's future direction, among other benefits. 

AEVO token holders also enjoy reduced trading fees on the platform.

Aevo represents a rebranding of Ribbon Finance, in which Ribbon's native token, RBN, is fully transitioned into the new AEVO token. The Aevo team has announced that 45% of RBN owned by the DAO treasury, which has since transitioned into AEVO, will be distributed as follows:

• Up to 16% for incentives (including airdrop)

• Up to 9% for token liquidity

• Up to 5% for community growth and bounties

• 16% reserved for future DAO spending

Aevo Crypto Price Prediction

As a new token, AEVO has experienced significant volatility since its launch. AEVO's ATH (all-time high) was attained on the day of its launch (Mar 13, 2024). As of Mar 19, 2024, AEVO is trading at $2.13, 41.9% lower than its ATH of $3.67 and 5% higher than its ATL of $2.64, which was registered on Mar 19 itself.

Long-term forecasts for AEVO are relatively bullish, though some price prediction experts anticipate more volatility. CoinCodex expects the token to trade at $9.77 in 2025, but to fall to $8.34in 2030, while DigitalCoinPrice predicts it will reach $5.52 in 2025 and hit $15.94 in 2030.

Is Aevo Crypto a Good Investment?

You might consider investing in the AEVO token based on the following factors:

• Aevo is a rare platform that combines the security and privacy offered by blockchain technology with the familiarity and ease of use delivered by the CLOB-based order model. This unique combination has the potential to attract many new derivatives traders, including those from CEXs and traditional financial markets.

• AEVO has well-defined tokenomics. Its supply cap specification might provide a price boost, or at least price support, in the longer-term perspective. Additionally, AEVO offers a valuable governance function, enabling token holders to actively participate in the platform's management and influence its future direction.

Nevertheless, it always pays to be prudent in your investment and conduct sound research prior to investing.

Where to Buy the AEVO Crypto Token

AEVO can be bought on Bybit as a Spot pair (AEVO/USDT) or as a USDT Perpetual contract (AEVOUSDT). To mark its debut on Bybit, three exciting events are underway through the last week of March 31, 2024. 

The initial event features a Token Splash/Deposit to Earn competition, with a prize pool of 100,000 USDT exclusively available to new users, while the second event, Trade to Earn, boasts an 80,000 USDT prize pool in which the more you trade, the larger your reward share (up to 1,000 USDT per user). Lastly, the Lucky Draw event offers referees the chance to win a share of the 20,000 USDT prize pool.

Closing Thoughts 

Derivatives trading isn’t for the fainthearted or those shy of risk, particularly in the crypto world. Yet along with the risks, trading crypto derivatives often presents opportunities for remarkable returns. Aevo, equipped with the familiar and efficient CLOB model, helps traders effectively navigate the complex but potentially rewarding crypto derivatives scene.

Given that many traders are accustomed to the CLOB setup used by CEXs and traditional derivatives platforms, Aevo holds significant potential to capture a sizable portion of the crypto derivatives market. Since its inception in 2020 as Ribbon Finance, and subsequently as Aevo, the platform has facilitated over $10 billion in total trading volume. This impressive figure is likely to grow in 2024 — thanks to the widely publicized launch of the AEVO token.

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