Variational Review: Next-Gen On-Chain Derivatives Protocol

As the demand for advanced on-chain trading continues to rise, Variational has emerged as a powerful infrastructure protocol redefining how derivatives are created, traded, and settled in decentralized markets. Designed to support both retail and institutional users, Variational offers a flexible, secure, and fully on-chain framework for perpetuals, options, and custom derivative products. By removing traditional intermediaries and enabling smart-contract-driven settlement, it bridges the gap between sophisticated financial tools and the transparency of blockchain technology—making it a standout contender in the next generation of decentralized trading platforms. Read this Variational Review to explore more about the platform.

What is Variational?

Variational is an on-chain infrastructure protocol built to power retail and institutional-grade derivatives trading—including perpetual futures, options and other customizable financial products. It underpins applications like its “Omni” and “Pro” apps, handling peer-to-peer trading, clearing and settlement entirely via smart contracts. Trades are settled on-chain, and the protocol supports advanced features such as request-for-quote execution, escrow smart contracts for settlement, and modular architecture for building derivative-apps.

Variational Review: Core Features

• Zero-Fee Perpetual Trading: The Omni app offers perpetual futures trading with no maker or taker fees, making it highly cost-efficient for active traders.
• RFQ-Based Execution Model: Instead of a traditional order book, Variational uses a Request-For-Quote system that allows traders to receive competitive pricing directly from liquidity providers.
• On-Chain Clearing & Settlement: All trades are cleared and settled through isolated smart-contract escrows, reducing counterparty risk and increasing transparency.
• Customizable Derivatives Infrastructure: Through its Pro app, Variational allows institutions and advanced users to create and trade bespoke derivatives with flexible margin, settlement, and risk parameters.
• Deep Liquidity Aggregation: By sourcing liquidity from multiple venues, including CEXs, DEXs, and OTC providers, the platform ensures tight spreads and efficient execution.
• Dual-App Ecosystem (Omni & Pro): The Omni app focuses on simple, fast perpetual trading for retail users, while the Pro app supports customizable, institutional-grade derivatives.

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Variational Review: Omni

Omni is a zero-fee perpetuals trading platform built on the Variational protocol, offering deep liquidity, broad market coverage, and unique trader rewards. With around 500 markets and an automated listing system, Omni provides immediate liquidity for new and exotic assets through its vertically integrated market maker, the Omni Liquidity Provider (OLP).

Instead of external market makers, OLP sources liquidity from CEXs, DEXs, AMMs, and OTC channels, enabling tight spreads across all listings. By capturing spread revenue internally, Omni redistributes value back to users in the form of rewards such as loss refunds, creating a closed-loop ecosystem.

Powered by on-chain clearing, in-house oracles, and integrated market making, Omni delivers a highly efficient and transparent trading experience unmatched by traditional perp platforms.

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Creating an Account

• Omni runs on Arbitrum One, so you need an EVM-compatible wallet (MetaMask or Rabby recommended) and USDC on Arbitrum One.
• Visit the Omni app, click Connect Wallet, and follow the secure login flow.
• Enter a referral code (can be found via Discord or Twitter).
• Accept the Terms of Service; access is blocked for restricted users or restricted countries.
• Wait for automatic portfolio creation, which sets up an on-chain settlement pool between you and OLP.
• Click Authenticate and sign the login message to complete setup.

Depositing Funds

• Ensure you have USDC on Arbitrum One ready to deposit.
• Click Deposit Funds (or Transfer → Deposit if you skipped the initial step).
• Enter the amount of USDC to deposit; note the flat $0.10 fee on all deposits and withdrawals.
• Sign the gasless allowance to authorize the transfer.
• Funds appear in your portfolio within seconds after on-chain confirmation.

Withdrawals on Omni

• Withdrawals work similarly to deposits and are gasless, with a flat $0.10 fee charged per withdrawal.
• Omni handles all on-chain interactions through its transaction handler to ensure secure and smooth processing.

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Withdrawal Flow

• The user enters the withdrawal amount through the Omni interface.
• The Omni backend verifies the request using the user’s authentication token and checks that the amount does not exceed available collateral.
• Once verified, the backend sends the request to the on-chain transaction handler, and the user’s balance is debited on the frontend.
• The on-chain handler submits a transaction to move funds from the user’s settlement pool back to their wallet.
• The system watches for confirmation; if the transaction fails, funds are automatically re-credited to the user’s account (minus the $0.10 fee).

Variational Review: Fees on Omni

Deposit / Withdrawal Fees

• Omni charges a flat $0.10 fee for every deposit and withdrawal.
• This small fee helps prevent spam transactions and covers on-chain gas costs.
• All deposits and withdrawals remain gasless for the user.

Trading Fees

• Omni charges zero trading fees.
• Users can trade perpetuals without paying maker or taker fees of any kind.

Liquidation Fees

• If a position is liquidated, Omni applies a 0.5% liquidation penalty.
• Short positions are liquidated at ask price + 0.5%, and long positions at bid price – 0.5%.
• This penalty is applied only when margin becomes insufficient.

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Variational Review: Omni Liquidity Provider (LP)

• The Omni Liquidity Provider (OLP) is a vertically integrated, on-chain market maker that serves as the sole counterparty to all trades on Omni, powered by a vault holding USDC, a proprietary market-making engine, and an advanced risk-management system.
• It generates tight spreads across nearly 500 markets using real-time data from CEXs and on-chain sources, while hedging exposure externally to stay market-neutral.
• Because OLP handles all market making internally, Omni can offer zero trading fees, loss refunds, and rapid listing of new or exotic markets. OLP earns revenue from spreads and shares a portion with the Variational protocol, which takes a percentage as its fee.
• Initially funded by the core team, OLP is designed to transition to a community vault once it demonstrates stability.
• User funds remain fully segregated in individual settlement pools, ensuring traders’ assets never leave the chain, even if OLP deploys its own capital to external venues for hedging.

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Variational Review: Omni Referrals

• Referral rewards are already being tracked, and full claim functionality is coming soon.
• Loss refund referral rewards are live now.
• Users earn USDC rewards based on their referrals’ trading activity.

Referral Rewards

• Referrers earn a flat 5% of all spreads paid by their referred users.
• These rewards will be claimable once the referral claim system goes live.
• All rewards are paid in USDC.

Referral Loss Refund Rewards

• Users earn an additional percentage of the loss refunds their referrals receive.
• These rewards do not reduce the referral’s own refund (fully additive).
• Rates are based on the user’s referral tier.

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Tier Structure

Tier	Referral Rate (bps)	Referral Rate (%)	Example Reward on $1,000 Loss Refund
No Tier	25 bps	0.25%	$2.50
Bronze	50 bps	0.5%	$5
Silver	125 bps	1.25%	$12.50
Gold	250 bps	2.5%	$25
Platinum	500 bps	5%	$50
Diamond	750 bps	7.5%	$75
Grandmaster	1,000 bps	10%	$100

Variational Review: Pro

• Variational Pro is an advanced, institutional-grade platform for trading OTC and customizable derivatives.
• It unlocks the full capabilities of the Variational protocol—supporting non-linear structures, block trades, and deeply configurable terms.
• Designed to replace the manual, slow, and high-risk workflows used in traditional OTC crypto derivatives markets.
• Automates the entire lifecycle of bilateral derivative trades—from quoting to settlement—removing reliance on Telegram chats, spreadsheets, legal back-and-forth, and manual collateral management.

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How Variational Pro Works

• Uses a Request-For-Quote (RFQ) system where institutions submit a trade structure and receive competing quotes from multiple market makers.
• Trades are peer-to-peer and settled in isolated on-chain settlement pools, ensuring no commingling of collateral and minimizing counterparty risk.
• Both parties deposit collateral into a smart-contract escrow, and the protocol automatically manages margin, funding, and liquidations.
• Fully customizable terms: users can choose counterparties, set bespoke margin rules, define liquidation behavior, and tailor every step of the clearing and settlement process.

Variational Review: $VAR

The Variational token ($VAR) is not yet launched, but its core utility will come from a system where at least 30% of all protocol revenue is used to buy back and burn $VAR, creating long-term value for holders.

Token distribution is planned as a 50/50 split between the community and affiliates (the operating company and development team). The community’s share will be released gradually through various programs, incentives, and ecosystem initiatives to ensure broad and sustainable participation.

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Key Points

• $VAR is not live yet.
• At least 30% of protocol revenue will be used for buy-and-burn.
• 50% of supply goes to the community over time via incentives.
• 50% to affiliates, including the team and operating company.

Conclusion

Variational, through both Omni and Pro, is building one of the most advanced infrastructures for on-chain derivatives. Omni delivers a seamless, zero-fee perpetual trading experience powered by a vertically integrated liquidity provider, while Pro addresses the long-standing inefficiencies of institutional OTC derivatives by automating quoting, settlement, and margining entirely on-chain.

With deep liquidity, customizable derivative structures, and a protocol-level revenue model designed to support long-term sustainability, Variational positions itself as a next-generation derivatives ecosystem for both retail and institutional users.

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