What is Beta Finance?

Beta Finance (BETA) is a permissionless asset market on the Ethereum blockchain that enables the provision, acquisition, and shorting of crypto assets. It strives to provide a scalable and accessible platform where tokens can be listed automatically and without permission, and users can short these tokens. Beta Finance provides three options to its users: providing assets, taking assets, and shorting. Users can provide their crypto assets to any market that exists on Beta Finance. Other users can take the opposite position, while short-sellers can use collateral to initiate short positions. Beta Finance follows an isolated collateral model to support volatile assets, meaning a collateralized position at risk of liquidation does not endanger another position.

How does Beta Finance work?

Beta Finance operates by allowing users to provide, acquire, or short crypto assets. Users can provide their crypto assets to any market on Beta Finance and may receive compensation. Other users, on the other hand, can take the opposite position. Short-sellers can use collateral to initiate short positions. Unlike traditional exchanges, Beta Finance does not use an order book to execute shorts but routes the trade through decentralized exchanges that use automated market makers. Beta Finance supports ETH, USDC, USDT, and DAI as valid collateral, with the community able to propose and vote for additional collateral support in Phase 2. Collaterals are subject to various collateral factors: stablecoins have a collateral factor of 90%, while ETH has a collateral factor of 80%.

What are the potential use cases for Beta Finance?

Beta Finance aims to address the volatility characteristic of crypto, which it identifies as a potential barrier to the adoption of DeFi by individuals and institutions. It sees short-selling as a critical financial tool that is missing in the DeFi ecosystem, which facilitates market stability and efficiency. Users can conveniently do so with the platform’s “1-Click Short” tool. A simple click of a button suffices to select the DEX to swap through and stake the newly swapped collateral with the principal in the short position. Beta Finance's isolated collateral model supports volatile assets, meaning a collateralized position at risk of liquidation does not endanger another position. This model means tighter fund security for users, meaning assets are safe even if Beta has a market with a compromised asset.

What is the history of Beta Finance?

Beta Finance was launched by Allen Lee, an MIT alumnus who previously worked as a software engineer at Microsoft and Facebook. It’s also backed by a group of investors, including Spartan Group, ParaFi Capital, Multicoin Capital, DeFiance Capital, and Delphi Digital. Anjan Vinod of ParaFi Capital was impressed with Beta Finance’s focus on novel assets, its isolated collateral model, and planned cross-chain support. Gabriel Tan of Spartan Group was equally positive, calling Beta Finance an up-and-coming permissionless asset market that is well-positioned to thrive in the space. The total supply of BETA is 1 billion tokens. BETA is an ERC-20 token on Ethereum and BEP-20 token on BSC. The security framework consists of four major pillars: Beta Finance continuously conducts internal code reviews, requests external reviews from security researchers, incorporates real-time monitoring services, and launches a bug bounty campaign for white hats.