Structured Floor Tokens (SFT) are like funds, but they are ERC-20 tokens that hold different assets, such as Debt and Derivatives. They have a floor value but no ceiling, so investors can fully participate in the upside without a cap.

The Participation Rate is the level of price exposure that an option provides on the underlying asset, in this case, ETH. If the ETH goes up or down, the investor's return will depend on the participation rate.

There are three types of risks for SFTs: opportunity cost, assumption risks, and smart contract risks. Currently, SFTs are unavailable for trading on the Marketplace, a quote-based decentralized exchange within the DOMANI dApp.

Where can you trade SFTs now?

Currently, SFTs are not available for trading on the Marketplace.

The Marketplace is a quote-based decentralized exchange (DEX) within the - DOMANI dApp to buy, sell and redeem DEXSTs (Decentralized Structured Tokens).

DOMANI Protocol launched the first structured token in October 2020 to understand market interest.

We found two main issues:

1. Liquidity
2. Pricing

In particular, Uniswap-like LPs are not suitable for assets with:

• Non-linear payoffs (if the market goes down, you don't lose much, and if the market goes up, you gain a lot or vice versa)
• Time decay (the embedded option in our SFT loses a bit of value daily).

These features tend to exacerbate impermanent loss, hence lowering the liquidity and making pricing less reliable.