Cortex Hedge

Hedge the exchange rate risk of USD stablecoins

Demo Video Source Code





Aave Borrow/Lending


This project was based on our submission for (ETHonline)[]. Our (uncompleted) curve integration is based on this (amazing project)[] The last time we focused on the front end, the economic incentivize and the user experience. This time we worked on integrating several (yield farming) protocols to improve our product.

How It's Made

Our product tokenizes deposits and converts them into a claim for payout in one year later. The payout depends on the EUR/USD exchange rate movement in the 1-year horizon. We invest the deposits in Aave and convert them into Euro stablecoins and invest them into curve (curve is not implemented yet). The payout is leveraged - meaning that a 1% increase in the EUR/USD rate will result in a 10% increase in the payout. We have two parties: Euro savers hold EURlong so that they receive a (positive) payout as soon as the dollar depreciates. This means that savers can hold 10% of their assets in EURlong to turn a USD savings position into a EURO savings account. Euro borrowers hold EURshort so that they receive a (positive) payout when the dollar increases in value. This means that debtors can hold 10% of their USD debt in EURshort to convert a USD debt position into a EURO debt position. Since the payoff is leveraged, it can also be used for FOREX speculation. Holding part of the assets in Euro has many advantages as we avoid an asymmetric payoff profile. Otherwise, a devaluation of the USD value would lead to euro debtors paying euro savers in a "depreciating" unit of account. We hereby hold 50% of our cash in Euro stablecoins while providing a flexible framework to hedge risks across savings/loan protocols.


kipit kipit Markus Schick Philipp Kläser
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