Definite Protocol is a decentralized finance (DeFi) protocol built on the Algorand blockchain that implements a delta-neutral hedging system through hedged ALGO (hALGO) tokens. The protocol allows users to mint hALGO tokens by depositing ALGO, providing price protection against ALGO volatility while maintaining exposure to yield generation through sophisticated hedging strategies. Definite Protocol also aims to provide a stable, decentralized alternative to USDC and USDT, allowing users to earn US dollar yield in various currencies. We utilize LSTs as collateral for delta neutral positions, offering industry-leading interest rates with principal protection. Our autonomous risk oracles help manage protocol risk, ensuring transparency and reactiveness. Definite Protocol's business model focuses on user profitability, sharing funding and interest opportunities equally. Users can hedge their LSTs and earn yields in major global currencies, including US Dollars (USD), Hong Kong Dollars (HKD), and United Arab Emirates Dirham (AED). By acting as a Global Currency Exchange (CX) for productive stable currencies backed by hedged cryptocurrencies, Definite Protocol provides essential infrastructure for zero-slippage forex operations and supports the development of composable financial solutions within the decentralized ecosystem.

The protocol operates on a delta-neutral hedging mechanism where user deposits are systematically hedged to minimize directional price risk while capturing yield from various arbitrage and trading strategies. Users receive hALGO tokens that represent their claim on the hedged ALGO pool, protected from downside price movements while participating in protocol-generated yields. At the core of Definite Protocol is the Autonomous Attestation & Risk Engine, which systematically assesses all relevant risk factors to produce an algorithmic risk score. This on-chain risk engine enables automated responses to key metrics such as funding rates and open interest percentages, setting a new benchmark for risk management in DEX-based DeFi environments.

Delta Neutrality: The protocol maintains a net delta position close to zero by taking offsetting positions in derivatives markets, ensuring that ALGO price movements have minimal impact on the overall portfolio value.

Risk Mitigation: Through diversified hedging strategies including futures, perpetuals, and options, the protocol provides downside protection while preserving upside participation potential.

Yield Generation: The hedging infrastructure enables multiple revenue streams including funding rate arbitrage, volatility premium capture, and basis trading opportunities.

The protocol consists of multiple smart contracts deployed on Algorand testnet, each serving specific functions within the ecosystem. The system is designed with enterprise-grade security, type safety, and production-ready architecture.

1. Smart Contracts: PyTeal-based contracts handling core protocol logic
2. Frontend Application: React TypeScript application with multi-wallet support
3. Oracle System: Price feed integration for accurate asset valuation
4. Risk Management: Automated risk assessment and liquidation mechanisms

• Asset ID: 746147845
• Asset Name: Hedged ALGO
• Unit Name: hALGO
• Decimals: 6
• Total Supply: 1,000,000,000,000,000 (1 billion with 6 decimals)
• Explorer Link: https://testnet.explorer.perawallet.app/asset/746147845/

• Application ID: 746147846
• Contract Address: EAE66DFVQLVWX6AM7DVGQUCZKJDOPBMDNLIOTXO55XZX4EJFVO2BTIELYI
• Deployment Transaction: KUZRMOU65QYMTSIEAITJ425JR744CM7DR7NRP4GAFT6FB2GEUOIA
• Confirmed Round: 55771896
• Explorer Link: https://testnet.explorer.perawallet.app/application/746147846/

• Minimum Deposit: 2 ALGO (2,000,000 microALGO)
• Exchange Rate: 1:1 (ALGO to hALGO)
• Operations: Mint, Redeem, Emergency Controls
• State Management: Global supply tracking, user balance management

• Integers: 10 slots
• Byte Arrays: 10 slots

• Integers: 5 slots
• Byte Arrays: 5 slots

• Address: 7V67MWCAVH2KKGY3CWVERTGV6DQMP2IMGVL4HTWHIUTRMUJBYYJ6UCW2ZQ
• Explorer Link: https://testnet.explorer.perawallet.app/address/7V67MWCAVH2KKGY3CWVERTGV6DQMP2IMGVL4HTWHIUTRMUJBYYJ6UCW2ZQ/

The protocol implements a comprehensive delta-neutral hedging system that protects users from ALGO price volatility while generating yield through systematic trading strategies.

Protocol Portfolio:
├── Long Position: User-deposited ALGO (underlying asset)
├── Short Hedge: Futures/Perpetuals contracts (price protection)
├── Volatility Hedge: Options strategies (volatility protection)
└── Arbitrage Positions: Cross-market opportunities (yield generation)

The protocol continuously monitors and adjusts its delta exposure:

• Target Delta: 0 (neutral to price movements)
• Rebalancing Threshold: ±0.1 delta deviation
• Adjustment Frequency: Real-time monitoring with periodic rebalancing

• Mechanism: Capture positive funding rates in perpetual futures markets
• Execution: Short perpetuals when funding rates are positive
• Risk Management: Position sizing based on funding rate volatility
• Expected Yield: 3-8% annually depending on market conditions

• Strategy: Sell volatility through options strategies when implied volatility exceeds realized volatility
• Implementation: Systematic options selling with delta hedging
• Risk Controls: Position limits and volatility exposure monitoring
• Target Return: 2-5% annually from volatility premium

• Approach: Exploit price differences between spot ALGO and futures contracts
• Execution: Long spot, short futures when basis is favorable
• Risk Mitigation: Convergence at expiry ensures profit realization
• Yield Potential: 1-3% annually from basis convergence

• Maximum Leverage: 2x on any single position
• Correlation Limits: Maximum 70% correlation between strategies
• Liquidity Requirements: Minimum 10% cash buffer for redemptions
• Stress Testing: Daily VaR calculations and scenario analysis

• Delta Tracking: Real-time delta measurement and reporting
• Hedge Ratio Optimization: Dynamic adjustment based on correlation analysis
• Performance Attribution: Separation of alpha from beta returns
• Risk Metrics: Tracking error, maximum drawdown, and Sharpe ratio monitoring

1. Deposit Validation: User deposits minimum 2 ALGO to protocol contract
2. Eligibility Check: Smart contract validates deposit amount and user eligibility
3. Hedge Execution: Protocol immediately hedges the deposited ALGO through derivative positions
4. Token Issuance: Equivalent hALGO tokens are minted to user's account
5. State Update: Global supply and user balance states are updated
6. Confirmation: Transaction is confirmed on Algorand blockchain

User Benefit: Immediate price protection and yield participation without managing complex hedging strategies.

1. Redemption Request: User initiates redemption of hALGO tokens
2. Balance Validation: Smart contract validates hALGO balance and burn amount
3. Hedge Unwinding: Protocol unwinds corresponding hedge positions
4. ALGO Transfer: Net ALGO amount (including accrued yield) is transferred to user
5. Token Burn: hALGO tokens are burned from circulation
6. Supply Adjustment: Global supply is decremented accordingly

Yield Distribution: Users receive their original ALGO plus their proportional share of protocol-generated yields.

• Pause Mechanism: Protocol can be paused by creator for emergency situations
• Unpause Mechanism: Protocol operations can be resumed by creator
• State Validation: All operations include comprehensive state validation

• Primary Language: PyTeal (Python-based TEAL generator)
• TEAL Version: 6
• Compilation Target: Algorand Virtual Machine (AVM)

• Input Validation: All user inputs are validated before processing
• State Consistency: Atomic operations ensure state consistency
• Access Controls: Creator-only functions for emergency management
• Overflow Protection: Safe arithmetic operations throughout

• Framework: React 18 with TypeScript
• Build Tool: Vite
• Styling: Tailwind CSS
• State Management: React Hooks and Context API
• Blockchain Integration: AlgoSDK v3.0.0

• Pera Wallet: Primary wallet integration
• Defly Wallet: Secondary wallet support
• Lute Wallet: Additional wallet option
• WalletConnect: Cross-platform wallet connectivity

• Multi-wallet Support: Connect with multiple Algorand wallets
• Real-time Balance: Live ALGO and hALGO balance display
• Transaction History: Complete transaction tracking
• Quote System: Real-time mint/redeem quotes with slippage
• Responsive Design: Mobile and desktop optimized interface

• Node.js 18+ and npm
• Python 3.8+ with PyTeal
• Algorand SDK
• Git

git clone https://github.com/your-repo/Definite-Protocol-UI.git
cd Definite-Protocol-UI
npm install

cp .env.example .env
# Configure environment variables

npm run dev

npm run build

contracts/
├── protocol/
│   ├── SimpleHALGO.py          # Main protocol contract (deployed)
│   ├── EnterpriseHALGO.py      # Advanced protocol features
│   ├── HedgedAlgoProtocol.py   # Full hedging implementation
│   ├── RiskManager.py          # Risk assessment contract
│   └── RebalanceEngine.py      # Automated rebalancing
├── oracles/
│   ├── PriceOracle.py          # Price feed contract
│   ├── SimplePriceOracle.py    # Basic price oracle
│   └── EnterprisePriceOracle.py # Advanced oracle features
└── common/
    └── pyteal_imports.py       # Shared PyTeal utilities

python3 contracts/protocol/SimpleHALGO.py

python3 scripts/deploy_simple_contracts.py

• Testnet Algod: https://testnet-api.algonode.cloud
• Testnet Indexer: https://testnet-idx.algonode.cloud
• Genesis ID: testnet-v1.0
• Genesis Hash: SGO1GKSzyE7IEPItTxCByw9x8FmnrCDexi9/cOUJOiI=

• Minimum Deposit: 2,000,000 microALGO (2 ALGO)
• Exchange Rate: 1:1 (ALGO to hALGO at mint)
• Exit Fee: 0.1% (0.001)
• Rebalancing Threshold: 0.1 delta deviation

• Maximum Leverage: 2x on individual positions
• Liquidity Buffer: 10% of total assets
• Correlation Limit: 70% maximum between strategies
• Volatility Threshold: 50% implied volatility cap

• Performance Fee: 20% of generated alpha
• Management Fee: 1% annually on assets under management
• User Share: 80% of net yields after fees
• Reserve Fund: 5% of profits for protocol development

npm test

npm run test:integration

python3 -m pytest tests/

• Deployment Date: December 2024
• Network: Algorand Testnet
• Features: Basic mint/redeem functionality
• Status: Active and operational

• Asset ID 746099848: Previous deployment (10 ALGO minimum)
• App ID 746099850: Previous contract version
• Status: Deprecated in favor of current deployment

• Internal Review: Completed
• External Audit: Pending
• Bug Bounty: Not yet launched

• Testnet deployment only
• Limited oracle integration
• Basic risk management features

1. Fork the repository
2. Create feature branch
3. Implement changes with tests
4. Submit pull request
5. Code review and merge

• TypeScript strict mode enabled
• ESLint and Prettier configured
• 100% test coverage required
• Documentation for all public APIs

This project is licensed under the MIT License. See LICENSE file for details.

• Technical Docs: /docs directory
• API Reference: Generated from TypeScript interfaces
• Contract Specs: /contracts/README.md

• GitHub Issues: Bug reports and feature requests
• Discussions: Technical discussions and questions

• Email: support@definite-protocol.com
• Website: https://definite-protocol.com

• Downside Protection: Systematic hedging reduces portfolio volatility by 60-80%
• Yield Enhancement: Target annual returns of 6-15% through diversified strategies
• Capital Efficiency: No need to manage complex derivative positions individually
• Liquidity: Instant redemption capability with minimal slippage

• Conservative Investors: Seeking ALGO exposure with reduced volatility
• Yield Seekers: Looking for enhanced returns on ALGO holdings
• Institutional Players: Requiring systematic risk management for large positions
• DeFi Participants: Wanting exposure to advanced trading strategies without complexity

Total Protocol Revenue:
├── Funding Rate Arbitrage: 40-60% of revenue
├── Volatility Premium: 20-30% of revenue
├── Basis Trading: 10-20% of revenue
└── Other Strategies: 5-15% of revenue

Protocol Expenses:
├── Hedging Costs: 30-40% of gross revenue
├── Slippage and Fees: 10-15% of gross revenue
├── Operational Costs: 5-10% of gross revenue
└── Reserve Fund: 5% of gross revenue

• Break-even AUM: 10,000 ALGO minimum for operational efficiency
• Optimal AUM: 100,000-1,000,000 ALGO for strategy diversification
• Scalability Limit: 10,000,000 ALGO before market impact concerns

• Basic protocol implementation with delta-neutral framework
• Smart contract deployment on Algorand testnet
• Frontend application with multi-wallet integration
• Core minting and redemption functionality

• Perpetual futures integration for systematic hedging
• Options strategies for volatility capture
• Real-time oracle integration for accurate pricing
• Advanced risk management and monitoring systems
• Comprehensive security audit and testing

• Mainnet deployment with full hedging capabilities
• Institutional-grade reporting and analytics
• Cross-exchange arbitrage implementation
• Governance token launch and DAO structure
• Insurance fund establishment

• Multi-asset hedging support (other Algorand assets)
• Cross-chain integration for broader market access
• Advanced derivatives strategies (exotic options, structured products)
• Institutional custody and compliance features

• Code Vulnerabilities: Potential bugs in smart contract implementation
• Upgrade Risk: Protocol changes may affect user positions
• Oracle Risk: Price feed manipulation or failure scenarios

• Hedging Inefficiency: Imperfect correlation between hedging instruments and ALGO
• Liquidity Risk: Insufficient liquidity in derivative markets during stress periods
• Counterparty Risk: Exposure to centralized exchanges and market makers

• Key Management: Dependency on protocol administrators for emergency functions
• Infrastructure Risk: Reliance on external systems and data providers
• Regulatory Risk: Potential regulatory changes affecting DeFi protocols

• Multi-signature Controls: Critical functions require multiple approvals
• Circuit Breakers: Automatic halt mechanisms during extreme market conditions
• Gradual Rollout: Phased deployment with capacity limits
• Continuous Monitoring: Real-time risk metrics and alerting systems

• Insurance Fund: Protocol-maintained reserve for covering losses
• Position Limits: Maximum exposure limits per strategy and counterparty
• Stress Testing: Regular scenario analysis and risk assessment
• Diversification: Multiple hedging strategies to reduce concentration risk

This software is provided as-is for educational and testing purposes. The protocol implements sophisticated financial strategies that carry inherent risks. Users should thoroughly understand the delta-neutral hedging mechanism and associated risks before participating.

The protocol is currently deployed on Algorand testnet only and should not be used with real funds until:

• Comprehensive security audits are completed
• Mainnet deployment is officially announced
• Full hedging infrastructure is operational
• Regulatory compliance is established

This documentation does not constitute investment advice. The described yield projections and risk metrics are estimates based on historical data and theoretical models. Actual results may vary significantly from projections.

Users are responsible for:

• Understanding the protocol mechanics and risks
• Conducting their own due diligence
• Complying with applicable laws and regulations
• Managing their own risk tolerance and position sizing