# The DeFi Derivatives Powerhouse: Polynomial By [Gyan](https://paragraph.com/@cosmogyral) · 2023-05-11 --- Gm Traders!👋 Traders in web3 face a unique dilemma; to trade on a DEX or a CEX? the question seems simple, but the answer is not. A person who likes the idea of self custody chooses a DEX over a CEX but gets rekt trying to buy and sell on mainnet, not to mention the liquidity and slippage issues on DEXs, **traders have to chose between better liquidity vs better decentralisation** 🤷‍♂️ which many at times, is better liquidity. traders get habitual trading on CEX, and then events like FTX remind us the importance of self custody again. Many users get overwhelmed to even understand web3 UI/UX, one more barrier for people trying to use blockchain and start their self custody journey _but what if I told you there’s a DEX, where you can trade without worrying about liquidity and slippage, fees and most importantly self custody and decentralization?👀_ Enter Polynomial Trade✨🔴 ------------------------- Polynomial trade is a decentralised derivative trading exchange powered by [Synthetix ⚔️](https://synthetix.io/) and [Pyth network 🔮](https://pyth.network/) on Optimism. Traders can long or short their favourite coins on polynomial on 15+ pairs with upto 50x in leverage📈👀 ![polynomial.fi](https://storage.googleapis.com/papyrus_images/7045ea400657cad4102eb02a40a3bd0fdf7be37ae58e0d1f01e00a71e2100756.png) polynomial.fi Launched on 27th march, it has quickly become popular across the OP ecosystem✨ traders no longer have to worry about liquidity and slippage, and fees💲on optimism are lower than mainnet. [https://twitter.com/PolynomialFi/status/1640347721725771780](https://twitter.com/PolynomialFi/status/1640347721725771780) > _CEX like experience for perpetual futures without compromising security_ Fees on Polynomial trade are around 5-10 bps which are lower in comparison to competitors. In addition to this, polynomial has a CEX like UI but cleaner which makes it comprehendible to newbies It has launched two more DeFi focused products previously, namely the [Polynomial Earn](https://earn.polynomial.fi/) and Polynomial Swap. In this article we’ll mostly focus on polynomial trade but first, ### Wtf are Perps?! perps or short for perpetual futures are derivatives that let you buy or sell the value of an underlying asset. This is a derivatives contract without an expiration date, the trader can choose when to exit the contract There is generally a spread between the perp and the spot price of the asset, to mitigate this, a funding fee is charged. You can either LONG📈 or SHORT📉 a contract Smart Wallets⚡ -------------- A smart contract wallet is a wallet 👛 managed by a contract account instead of an Externally Owned Account. It is a programmable wallet which is a digital wallet governed by predefined rules programmed into a smart contract. It is something unique to polynomial, consider it as a wrapped wallet in a smart contract. Users can deposit collateral in the form of synthetix wrapped assets such as sUSD into their smart wallets, this can be used as margin to trade on different pairs such as ETH-USD and BTC-USD ![](https://storage.googleapis.com/papyrus_images/5f9ee20a2a44f30e7f155e9dd3fcc59c0bd55c70d9036301d89fcf52e9579f8a.png) smart wallets have the following features: * **Security⚔️:** The smart contract already has pre-programmed instructions to execute certain transactions. This means no more hacks and compromises. _A smart contract wallet can offer a higher level of security than a traditional wallet._ * **Advanced orders⌨️:** Smart contract wallets can help Polynomial trade to provide advanced orders like limit orders, stop loss orders, SL, TP, and more. These smart wallets can also be integrated into other platforms as well👀 The possibilities are ♾️. * **Transparency:** Everything’s on the blockchain and can be verified whenever needed unlike CEXs. This transparency strengthens confidence among users and the perp exchange. ![](https://storage.googleapis.com/papyrus_images/b3af527c544a6362d9febb2572d015280b26db7116204f8acd1daa30f036c774.png) Step by Step into Polynomial🪜 ------------------------------ now that we’ve understood what polynomial trade is, let’s learn how we can deposit into polynomial’s smart wallet and start trading * Open [polynomial trade](https://trade.polynomial.fi/) on your browser and click connect wallet🖱️ ![](https://storage.googleapis.com/papyrus_images/8d20e82fff36deb9ad97d45f94d35987eb9c790e7356521d6d7680881da4a433.png) * remember about the smart wallet we talked about earlier? upon connecting, you’ll find a smart wallet button on the top right corner of the screen ![](https://storage.googleapis.com/papyrus_images/45faed2d2f1e3d232da315686ec969daabd6b8322d00242b733dcb92c961c828.png) * A smart wallet menu will open and for first time connectors, you’ll have to create a polynomial wallet first, upon opening you can deposit sUSD as collateral. If you don’t have sUSD, you can swap it right away from polynomial’s inbuilt swap function for synthetix assets ![](https://storage.googleapis.com/papyrus_images/5a7a9daadc353d258e56fb892d2a28e571d96520e743256e7da5655f026e835c.png) ![](https://storage.googleapis.com/papyrus_images/3b73b9408473f8bbfe4aaf8211b06eb8b267d38d0a5be2d1959a20e671596b2f.png) * After depositing, we can now trade on any listed perp, in this case ETH-USD * Another menu will show up, and you can decide how much margin you have to put in for trading, adjust the leverage and can decide what type of order you want to put into ![](https://storage.googleapis.com/papyrus_images/0fec1a2817e2a1e31d342ec30df2ae3f993a39a31cbdecaf93fa36633dbb7f2c.png) * After adjusting all these settings, voila! you’re set up for placing a trade, your trades will show up in the open positions tab in the bottom * and as always, trade responsibly anon🫡 Past and Present Events: Shanghai Trading week and OP season🔥 -------------------------------------------------------------- Polynomial announced a trading contest week on the event of the Shanghai event recently with ~6.9k USD in prizes. Winners were chosen on the amount of profits made trading on polynomial throughout the week another big event currently running is the OP season event👀. Around 5.3M OP (~14M) will be distributed to traders in a 20 week duration. The distribution structure will be as follows: Week 1: 10,000 OP🔴 Week 2-3: 100,000 OP🔴 Week 4-20: 300,000 OP🔴 OP can be claimed every week from the rewards section. During this event, OI caps will be increased, traders could trade up to 50x in leverage and fees would be slashed to around 2bps. Interesting isn’t it?!👀✨ For more info check out this blog: [https://mirror.xyz/0xf3897707d8Fa5dC27b2A6575319e409a464eB8D8/HarQkeKy1sz0RRv1Gb8pRMnBG1N\_ducUeTLUyxe2La8](https://mirror.xyz/0xf3897707d8Fa5dC27b2A6575319e409a464eB8D8/HarQkeKy1sz0RRv1Gb8pRMnBG1N_ducUeTLUyxe2La8) Conclusion and Final Thoughts🎙️ -------------------------------- polynomial is a great choice for a person who trades on a CEX but needs a Decentralized alternative, for anyone who loves self custody, for anyone who loves a great UI with an awesome functionality _Polynomial is a great choice for anyone who is a trader_ and yes, make sure to follow polynomial on twitter and join the community 👥 at [discord](https://discord.gg/polynomial) to get the latest updates. Until then, adios! :pepelove:❤️👀 --- *Originally published on [Gyan](https://paragraph.com/@cosmogyral/the-defi-derivatives-powerhouse-polynomial)*