PSC Overview

PSC

A Profit Swap Contract is an innovative product invented by Vanilla Finance. It allows users to pay a fixed fee to gain exposure to the potential profits of an underlying asset over a predefined period, without incurring liquidation risks or additional costs.

What is the Vanilla Finance Profit Swap Contract?

Vanilla Finance's Profit Swap Contract allows users to exchange a fixed payment for 100% of the returns on an underlying asset over a defined period.

The Industry's First Product Offering Up To 10,000x Leverage, Letting You Own 1 Bitcoin for Just $10.

What is a Profit Swap Contract in Traditional Finance?

A Profit Swap contract in traditional finance typically involves both parties agreeing to exchange cash flows based on profits generated by certain underlying assets or projects over a defined future period. The buyer pays a fixed cost in exchange for receiving variable profit-related payments. The structure is similar to other financial derivatives but contains specific elements reflecting the characteristics of profit-sharing.

Below are the typical key components of a Profit Swap contract:

1. Parties Involved

• Party A: Usually the company or project owner that seeks to lock in profits or hedge profit-related risks.

• Party B: Often an investor providing financial support, willing to assume some risk in exchange for potential higher profits.

2. Underlying Asset

• The underlying project or asset generates the profits to be exchanged. Examples include a real estate development project, a wind power plant, or a specific business unit of a company.

3. Profit Sharing Ratio

• The sharing ratio defines how the profits are divided between the parties. For example, Party A might receive 70% of the profits, while Party B receives the remaining 30%.

4. Maturity Date

• The contract should clearly define its duration, such as 3 years, 5 years, or upon completion of a specific project.

Back to example, in a bullish⬆️ Profit Swap Contract, a user can pay 10 USDT to gain the full return from the price increase of 1 BTC over the next 10 minutes.

Fixed Payment	10 USDT
Underlying Asset	BTC
Amount	1
Profit Sharing Ratio	100%
Maturity Time	10 Minutes

What is the key innovation of Vanilla Finance's Profit Swap Contract?

The main innovations of Vanilla Finance's Profit Swap Contract are in the following aspects:

1. Introducing the Profit Swap Contract into the cryptocurrency industry for the first time and standardizing it

For the first time, this contract standardizes non-standard products from traditional finance.

With this innovation, It simplifies transactions by removing the need for complex contract negotiations and risk assessments, making the process faster and more cost-effective. Standardized products also increase liquidity, reduce counterparty risk, and provide greater transparency, allowing for easier regulatory compliance and more efficient market participation.

2. Hundreds of Underlying Assets

Another key innovation is that Vanilla Finance has expanded the underlying assets to over 100 cryptocurrency assets. This means users can easily trade not only BTC but also hundreds of other crypto assets, offering a much broader selection for trading.

3. Expand leverage up to 10,000x

In traditional cryptocurrency trading products, perpetual contracts are the highest-leverage financial derivatives, allowing leverage up to 125x. However, in actual user scenarios, even high-level traders typically use leverage of only 10-30x, as they need to control the risk of liquidation.

In Vanilla Finance's Profit Swap Contract, users can easily utilize leverage ranging from 1,000x to 10,000x, without the risk of liquidation during the holding period of the asset. Users can choose to settle manually or automatically settled by the contract.