> For the complete documentation index, see [llms.txt](https://derivio.gitbook.io/v1/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://derivio.gitbook.io/v1/introduction-to-derivio/architecture.md). # Architecture Derivio's **phase one** first-order structured derivatives are built on top of a Liquidity-as-a-Service derivatives model with a focus on execution and pool security, in order to extend it to the creation of new markets that offer better risk hedging. Derivio creates a universal margin & liquidity engine which offers traders deep liquidity & a smooth trading experience, to enable liquidity providers one-click market-neutral market-making abstraction, to serve as the foundation for an ecosystem of product offerings.

Derivio Phase 1 Architecture

**Entities:** [Traders](/v1/trading.md): Trade perpetual and options over a wide range of market offerings: (long-tail) **tokens**, **forex**, **NFTs, commodity, metal** and **energy...** [Liquidity Providers](/v1/providing-liquidity.md): Provide liquidity to Derivio's index pools (Main, Blue Chip, Stablecoin) and share the yield from trading activities, while tracing the [smart market beta](https://www.investopedia.com/terms/s/smart-beta.asp) (β) carefully selected and tailored by Derivio's experienced quant team. Use LP tokens to mint yield/bond tokens. [Yield Investors](/v1/providing-liquidity/interest-rates-and-bonds.md): Mint/buy the tokenized yield and enjoy the pure yield exposure (zero-delta) [Bond Investors](/v1/providing-liquidity/interest-rates-and-bonds.md): Mint/buy the tokenized zero-coupon bond with a discount from par value, stake it until maturity to get the original asset DRV token / NFT holders: Have the ultimate ownership over Derivio, govern & share the upside of the protocol Derivio's **phase two** will focus on higher-order structured derivatives that bring exotic passive investment opportunities such as [autocallables](https://www.superderivatives.com/EQ/EQ_Help/Content/FM/Autocallable.htm#instruments_eq_152310818_1133485), with an emphasis on fair pricing, open auction & access.

Structured Derivatives in TradFi

TradFi derivatives: "We structure the deal so it won’t make any sense to you. We make the market and you pay for it. We may rug you but you have to trust us.”

Derivio's DeFi Structured Products

DeFi derivatives: Trustless counterparties and permissionless access are guaranteed by the blockchain — no one can rug your fund, and you don't need to be a VIP at big banks. Liquidity providers get access to the yield while offering the counterparties unique tools to hedge. --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com. ## Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://derivio.gitbook.io/v1/introduction-to-derivio/architecture.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.