The Jarvis Network: Synthetic Assets on Ethereum

Launched in 2018, the Jarvis Network is a set of Ethereum-based protocols and tools that allow users to gain exposure to any financial instrument through margin trading and synthetic assets. In the company’s own words, it has set its sights on “blockchainifying” traditional financial markets. The end goal of Jarvis is to remove intermediaries from financial markets, making them open, more transparent, interoperable, and programmable.

To create an immersive and secure ecosystem, the Jarvis Network encases several different tools and protocols, all working towards the same goal. The protocols are Margineum, Synthereum, and the Jarvis Reward Token (JRT), while the Jarvis Market, the Jarvis Exchange, and the Jarvis Wallet are tools built by the Jarvis team that work on top of these protocols.

According to Pascal Tallarida, CEO and founder of Jarvis, the project first began as a simple platform for the trade of contracts of differences (CFDs) “that could connect to multiple brokers”. Realizing the potential of having multiple financial markets and assets unified into a single interface, Tallarida saw blockchain technology as the perfect tool to enable this.

Jarvis had its first contact with cryptocurrencies in 2017 when the platform was integrated with Poloniex, enabling its users to trade digital assets. The thing that was missing from Jarvis were dapps. The team, in Tallarida’s words, realized the potential of Ethereum and its smart contracts, marking the “birth of the Jarvis Network”; the whitepaper was published in 2018.

The introduction of proprietary dapps on the network was what opened up the world of synthetic assets. Tallarida said that the only thing left from the original Jarvis project was the idea of interoperability — having assets such as the euro that could be swapped either for BTC or gold directly on the blockchain.

Expanding on that idea led the way to other, more complex financial products — issuing loans in synthetic assets, or using them as collateral to trade futures.

At the center of the Jarvis Network stands Margineum, a trust-minimized off-chain trading protocol, which allows traders to open off-chain leveraged positions on different markets such as Forex, indices, stocks, and cryptocurrencies, all collateralized and settled in DAI. Users trade against liquidity pools supplied by liquidity providers, with each provider able to set their own set of rules regarding the spread, commissions, leverage, price sources, etc. The flexibility of the protocol effectively uberizes brokerage, allowing both traders and liquidity providers to run sophisticated business strategies. Margineum is currently in closed beta, with $60 million of trading volume, reportedly, generated in 2020.

The Synthetic protocol, called Synthereum, and currently the focus of the Jarvis team’s efforts, is a natural extension of Margineum. The protocol was launched on a testnet in February 2020 using Chainlink price feeds, and was later adapted to the new UMA contracts and integrated therein. The on-chain trading protocol leverages the UMA platform, allowing users to create synthetic assets. Synthetic assets on Jarvis are essentially tokens that track the price of any asset, be it traditional or digital.

These tokens are converted directly in the Synthereum smart contract without the need for a counterparty. Namely, converting one digital asset to another happens through a burn, where burning one token results in the automatic minting of another token with the same value. For example, when converting EUR to GBP, for every one synthetic euro burned, a token worth 0.8 synthetic British Pounds is minted. 

Synthereum also leverages the power of liquidity providers. Traders deposit their collateral in liquidity pools supplied by providers, which are responsible for ensuring the over-collateralization of the minted assets. To help them mitigate some of the liability, liquidity providers can hedge their risk through the Margin protocol.

While anyone can develop a dapp on top of the Jarvis protocols, the team behind Jarvis launched their own products to help users interact with the network. First, there is the Jarvis Market, a trading platform that allows users to interact with Margineum. The platform utilizes Jarvis Trader, a standalone proprietary trading platform that allows traders to connect to several traditional exchanges and brokers. Further down the road, the Jarvis Market will also offer additional social features through integrations with projects such as 3box and Set Protocol.

Second, there’s the Jarvis Exchange, a DEX similar to Uniswap, which interacts with Synthereum.

Lastly, the product that has the most potential to bring Jarvis to the forefront of DeFi is its wallet. Built on Gnosis Safe and Unilogin, the wallet is more reminiscent of Revolut than of a traditional cryptocurrency wallet. The base currency of the wallet isn’t cryptocurrencies, but synthetic fiat currencies. Once launched, it will support 30 fiat currencies, including synthetic Euros, Swiss francs, and British pounds. Through a partnership with Ramp.network, users will be able to instantly buy DAI with bank transfers and have them automatically converted into synthetic currencies, free of charge and without the need for KYC. 

Each of these aspects of the Jarvis network is governed by a DAO, which is secured and powered by the Jarvis Reward Token (JRT). The token is staked by validators and relayers to align their interests with those of the protocol. To reciprocate, the DAO manages a hefty 100 million JRT reward fund that distributes the tokens across various reward programs, incentivizing good actors to bring value to the ecosystem.

“With integrations like Ramp Network in Jarvis Wallet, we want users to directly buy our Synthetic assets (jEUR, jGBP, etc.) with their fiat money. And to ease the onboarding frustration that ETH gas fees might cause, we launched our Sponsoring program which allows us to collect interest from our community deposits on Aave (they get rewarded in JRT for doing so), the interest collected will be later used to cover the onboarding fees on new users. This way we can have 0-fee fiat onramp to Jarvis Network directly in our Wallet,” Vsevolod Potorocha, the community manager of Jarvis, told The Chain Bulletin.

With Synthereum now officially launched on the mainnet and the integration with Chainlink fully completed, the team behind Jarvis is gearing up for an exciting year. While there is still no clear roadmap for the rest of 2021, developers will have their hands full with ensuring the structural integrity of the protocol. 

Potorocha also told The Chain Bulletin that more audits of the protocol were planned in the coming weeks. The team is working closely with Halborn, a blockchain cybersecurity company, which was tasked with auditing the forked UMA contracts and is currently auditing the Synthereum protocol.

When asked why the audit was not completed prior to deployment to mainnet, Potorocha explained:

“A full audit was not conducted due to time constraints mostly. However, the idea of a soft launch is not new, as we want to get more independent researchers to audit Synthereum before we will fully unlock Synthereum. Security is our utmost priority, as we do not want to put users’ funds at unnecessary risk.”

Despite the project now being live, there is still a firm cap on the number of synthetic assets that can be minted. This, Potorocha explained, will allow the team to do more tests without risking too much of the capital users have locked in the protocol.