{"id":48091,"date":"2025-08-18T19:00:40","date_gmt":"2025-08-18T16:00:40","guid":{"rendered":"https:\/\/coinengineer.net\/blog\/?p=48091"},"modified":"2025-08-18T14:15:18","modified_gmt":"2025-08-18T11:15:18","slug":"what-is-overlay-protocol-ovl","status":"publish","type":"post","link":"https:\/\/coinengineer.net\/blog\/what-is-overlay-protocol-ovl\/","title":{"rendered":"What Is Overlay Protocol (OVL)?"},"content":{"rendered":"<p class=\"break-words\" dir=\"auto\"><a href=\"https:\/\/coinengineer.net\/blog\/binance-alpha-overlay-protocol-ovl-token-listing-airdrop\/\"><strong class=\"font-semibold\">Overlay Protocol<\/strong><\/a> is a decentralized finance (DeFi) platform that enables users to build positions on markets or data streams without traditional counterparties (liquidity providers or market makers) taking the other side of the position.<\/p>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_71 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/coinengineer.net\/blog\/what-is-overlay-protocol-ovl\/#What_Is_Overlay_Protocol\" title=\"What Is Overlay Protocol?\">What Is Overlay Protocol?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/coinengineer.net\/blog\/what-is-overlay-protocol-ovl\/#Overlay_Protocol_Market_Types\" title=\"Overlay Protocol Market Types\">Overlay Protocol Market Types<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/coinengineer.net\/blog\/what-is-overlay-protocol-ovl\/#How_Does_Overlay_Offer_Markets_Without_Counterparties\" title=\"How Does Overlay Offer Markets Without Counterparties?\">How Does Overlay Offer Markets Without Counterparties?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/coinengineer.net\/blog\/what-is-overlay-protocol-ovl\/#Pricing_and_Oracle_Usage\" title=\"Pricing and Oracle Usage\">Pricing and Oracle Usage<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/coinengineer.net\/blog\/what-is-overlay-protocol-ovl\/#How_Does_Trading_Work_Collateral_and_ProfitLoss\" title=\"How Does Trading Work? (Collateral and Profit\/Loss)\">How Does Trading Work? (Collateral and Profit\/Loss)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/coinengineer.net\/blog\/what-is-overlay-protocol-ovl\/#Overlay_Protocol_OVL_Tokenomics\" title=\"Overlay Protocol (OVL) Tokenomics\">Overlay Protocol (OVL) Tokenomics<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/coinengineer.net\/blog\/what-is-overlay-protocol-ovl\/#Overlay_Protocol_OVL_Vesting_Schedule\" title=\"Overlay Protocol (OVL) Vesting Schedule\">Overlay Protocol (OVL) Vesting Schedule<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/coinengineer.net\/blog\/what-is-overlay-protocol-ovl\/#Nature_of_Contracts\" title=\"Nature of Contracts\">Nature of Contracts<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/coinengineer.net\/blog\/what-is-overlay-protocol-ovl\/#Governance\" title=\"Governance\">Governance<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/coinengineer.net\/blog\/what-is-overlay-protocol-ovl\/#How_Is_Overlay_Different\" title=\"How Is Overlay Different?\">How Is Overlay Different?<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/coinengineer.net\/blog\/what-is-overlay-protocol-ovl\/#What_Are_Perpetual_Futures_Contracts_Perps\" title=\"What Are Perpetual Futures Contracts (Perps)?\">What Are Perpetual Futures Contracts (Perps)?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/coinengineer.net\/blog\/what-is-overlay-protocol-ovl\/#Oracle-Based_Pricing\" title=\"Oracle-Based Pricing\">Oracle-Based Pricing<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/coinengineer.net\/blog\/what-is-overlay-protocol-ovl\/#Lack_of_Traditional_Counterparties\" title=\"Lack of Traditional Counterparties\">Lack of Traditional Counterparties<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/coinengineer.net\/blog\/what-is-overlay-protocol-ovl\/#No_Limit_Orders\" title=\"No Limit Orders\">No Limit Orders<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/coinengineer.net\/blog\/what-is-overlay-protocol-ovl\/#Funding_Rates\" title=\"Funding Rates\">Funding Rates<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-16\" href=\"https:\/\/coinengineer.net\/blog\/what-is-overlay-protocol-ovl\/#Pricing_and_Price_Impact\" title=\"Pricing and Price Impact\">Pricing and Price Impact<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-17\" href=\"https:\/\/coinengineer.net\/blog\/what-is-overlay-protocol-ovl\/#Risk_Management_Payoff_Caps_Open_Interest_Caps_and_Circuit_Breaker\" title=\"Risk Management: Payoff Caps, Open Interest Caps, and Circuit Breaker\">Risk Management: Payoff Caps, Open Interest Caps, and Circuit Breaker<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-18\" href=\"https:\/\/coinengineer.net\/blog\/what-is-overlay-protocol-ovl\/#Overlay_Protocol_Investors\" title=\"Overlay Protocol Investors\">Overlay Protocol Investors<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-19\" href=\"https:\/\/coinengineer.net\/blog\/what-is-overlay-protocol-ovl\/#Official_Links\" title=\"Official Links\">Official Links<\/a><\/li><\/ul><\/nav><\/div>\n<h3 class=\"text-xl\" dir=\"auto\"><span class=\"ez-toc-section\" id=\"What_Is_Overlay_Protocol\"><\/span>What Is Overlay Protocol?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p class=\"break-words\" dir=\"auto\">Built on the Arbitrum blockchain, this protocol offers markets based on non-manipulable and unpredictable numerical data feeds. This makes Overlay unique within the <strong class=\"font-semibold\">Ethereum<\/strong> ecosystem, providing deep liquidity and eliminating the need for traditional swap mechanisms.<\/p>\n<h3 class=\"text-xl\" dir=\"auto\"><span class=\"ez-toc-section\" id=\"Overlay_Protocol_Market_Types\"><\/span>Overlay Protocol Market Types<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p class=\"break-words\" dir=\"auto\">Overlay aims to offer various markets based on non-manipulable and unpredictable data feeds. These include:<\/p>\n<ul class=\"marker:text-secondary\" dir=\"auto\">\n<li class=\"break-words\">Non-traditional crypto markets: Hash rate, gas fees,\u00a0<strong class=\"font-semibold\">BTC<\/strong>\u00a0difficulty, NFT floor prices, social tokens, yield rates, etc.<\/li>\n<li class=\"break-words\">Non-crypto markets: E-sports and sports, sneaker prices, scalar social-political markets, nature and science markets, etc.<\/li>\n<\/ul>\n<p class=\"break-words\" dir=\"auto\">This broad scope allows Overlay to facilitate trading on digital data streams, setting it apart in the DeFi space.<\/p>\n<p dir=\"auto\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-165754 aligncenter\" src=\"https:\/\/coinmuhendisi.com\/blog\/wp-content\/uploads\/2025\/08\/overlay-4.png\" alt=\"\" width=\"323\" height=\"84\" \/><\/p>\n<h3 class=\"text-xl\" dir=\"auto\"><span class=\"ez-toc-section\" id=\"How_Does_Overlay_Offer_Markets_Without_Counterparties\"><\/span>How Does Overlay Offer Markets Without Counterparties?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p class=\"break-words\" dir=\"auto\">In Overlay, users build positions directly against the protocol or, more precisely, against all <strong class=\"font-semibold\">OVL<\/strong> token holders simultaneously. This model provides deep liquidity without requiring liquidity providers or traditional swap-based counterparties. The dynamic minting or burning of OVL tokens is used to manage inflation risk. For more details, refer to the protocol\u2019s official documentation.<\/p>\n<h3 class=\"text-xl\" dir=\"auto\"><span class=\"ez-toc-section\" id=\"Pricing_and_Oracle_Usage\"><\/span>Pricing and Oracle Usage<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p class=\"break-words\" dir=\"auto\">Pricing in Overlay markets is not dynamic in the traditional sense; it relies on data intermittently fetched from oracles. These values are adjusted by built-in protocol mechanisms. Overlay can integrate nearly any oracle, provided the feed is non-manipulable and unpredictable. For instance, Chainlink-like oracles support data streams like the Consumer Price Index (CPI), enhancing the platform\u2019s flexibility.<\/p>\n<h3 class=\"text-xl\" dir=\"auto\"><span class=\"ez-toc-section\" id=\"How_Does_Trading_Work_Collateral_and_ProfitLoss\"><\/span>How Does Trading Work? (Collateral and Profit\/Loss)<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p class=\"break-words\" dir=\"auto\">To open a position in Overlay markets, users must lock <strong class=\"font-semibold\">OVL<\/strong> tokens as collateral. Profit and loss (PnL) are settled in OVL. If a position is profitable, the protocol mints OVL to pay the user; if it incurs a loss, the locked OVL is burned to the extent of the loss. This dynamic mint-and-burn mechanism supports the platform\u2019s liquidity and community incentives.<\/p>\n<p dir=\"auto\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-165752 aligncenter\" src=\"https:\/\/coinmuhendisi.com\/blog\/wp-content\/uploads\/2025\/08\/overlay-3.png\" alt=\"\" width=\"665\" height=\"434\" \/><\/p>\n<h3 class=\"text-xl\" dir=\"auto\"><span class=\"ez-toc-section\" id=\"Overlay_Protocol_OVL_Tokenomics\"><\/span>Overlay Protocol (OVL) Tokenomics<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p class=\"break-words\" dir=\"auto\"><strong class=\"font-semibold\">OVL<\/strong> is the native ERC-20 token of Overlay Protocol, serving two primary functions:<\/p>\n<ul class=\"marker:text-secondary\" dir=\"auto\">\n<li class=\"break-words\"><strong class=\"font-semibold\">Trading Participation<\/strong>: Users lock OVL as collateral to open positions in Overlay markets. Profitable positions lead to OVL minting, while losses result in OVL burning.<\/li>\n<li class=\"break-words\"><strong class=\"font-semibold\">DAO Governance<\/strong>: OVL holders can vote on governance proposals, contributing to the community\u2019s development.<\/li>\n<\/ul>\n<p class=\"break-words\" dir=\"auto\"><strong class=\"font-semibold\">Token Details<\/strong>:<\/p>\n<ul class=\"marker:text-secondary\" dir=\"auto\">\n<li class=\"break-words\"><strong class=\"font-semibold\">Symbol<\/strong>: OVL<\/li>\n<li class=\"break-words\"><strong class=\"font-semibold\">Initial Supply<\/strong>: 88,888,888<\/li>\n<li class=\"break-words\"><strong class=\"font-semibold\">Maximum Supply<\/strong>: 1,000,000,000 (per certain launch partner requirements; however, the protocol follows a deflationary trend and has no plans to reach this level).<\/li>\n<\/ul>\n<p class=\"break-words\" dir=\"auto\"><strong class=\"font-semibold\">Token Allocation<\/strong>:<\/p>\n<ul class=\"marker:text-secondary\" dir=\"auto\">\n<li class=\"break-words\">Ecosystem: 42%<\/li>\n<li class=\"break-words\">Airdrop: 9%<\/li>\n<li class=\"break-words\">Marketing: 8%<\/li>\n<li class=\"break-words\">Strategic Partners: 28%<\/li>\n<li class=\"break-words\">Overlay Foundation: 13%<\/li>\n<\/ul>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-165746 aligncenter\" src=\"https:\/\/coinmuhendisi.com\/blog\/wp-content\/uploads\/2025\/08\/overlay-tokenomics-scaled.jpg\" alt=\"\" width=\"2560\" height=\"1440\" \/><\/p>\n<h4 class=\"text-xl\" dir=\"auto\"><span class=\"ez-toc-section\" id=\"Overlay_Protocol_OVL_Vesting_Schedule\"><\/span>Overlay Protocol (OVL) Vesting Schedule<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-165745 aligncenter\" src=\"https:\/\/coinmuhendisi.com\/blog\/wp-content\/uploads\/2025\/08\/overlay-vesting.jpg\" alt=\"\" width=\"2517\" height=\"1440\" \/><\/p>\n<h3 class=\"text-xl\" dir=\"auto\"><span class=\"ez-toc-section\" id=\"Nature_of_Contracts\"><\/span>Nature of Contracts<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p class=\"break-words\" dir=\"auto\">Positions in Overlay markets resemble <strong class=\"font-semibold\">perpetual futures contracts (perps)<\/strong>, with no expiration date or physical delivery, allowing contracts to roll over indefinitely. However, Overlay contracts have distinct features compared to traditional perps. For more details, refer to the protocol\u2019s official documentation.<\/p>\n<h3 class=\"text-xl\" dir=\"auto\"><span class=\"ez-toc-section\" id=\"Governance\"><\/span>Governance<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p class=\"break-words\" dir=\"auto\">Overlay Protocol is governed by the PlanckCat DAO, and in the future, <strong class=\"font-semibold\">OVL<\/strong> token holders will have voting rights. Voting weights are as follows:<\/p>\n<ul class=\"marker:text-secondary\" dir=\"auto\">\n<li class=\"break-words\">1 PCD NFT = 100,000 votes<\/li>\n<li class=\"break-words\">1 OVL token = 1 vote<\/li>\n<\/ul>\n<p class=\"break-words\" dir=\"auto\">This balance may change in the future. The PlanckCat DAO enables Overlay contributors to participate in governance through PCD NFTs, playing a central role in decision-making, such as listing or delisting markets and setting risk parameters. Non-PCD NFT holders can still engage in discussions via Discord and the Governance Forum.<\/p>\n<p dir=\"auto\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-165751 aligncenter\" src=\"https:\/\/coinmuhendisi.com\/blog\/wp-content\/uploads\/2025\/08\/overlay-2.png\" alt=\"\" width=\"1286\" height=\"145\" \/><\/p>\n<h3 class=\"text-xl\" dir=\"auto\"><span class=\"ez-toc-section\" id=\"How_Is_Overlay_Different\"><\/span>How Is Overlay Different?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<h4 class=\"\" dir=\"auto\"><span class=\"ez-toc-section\" id=\"What_Are_Perpetual_Futures_Contracts_Perps\"><\/span>What Are Perpetual Futures Contracts (Perps)?<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p class=\"break-words\" dir=\"auto\">Perps are a popular derivative contract type in crypto markets, allowing users to take <strong class=\"font-semibold\">long<\/strong> or <strong class=\"font-semibold\">short<\/strong> positions on an underlying asset without owning it, while paying or receiving funding based on market conditions. Unlike traditional futures, perps have no expiration date or asset delivery, rolling over indefinitely. Overlay market contracts share this structure but include unique features.<\/p>\n<h4 class=\"\" dir=\"auto\"><span class=\"ez-toc-section\" id=\"Oracle-Based_Pricing\"><\/span>Oracle-Based Pricing<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p class=\"break-words\" dir=\"auto\">Overlay uses oracle-based data feeds and native mechanisms for pricing, avoiding centralized limit order books (CLOB) used by traditional exchanges, where prices are based on the last purchase. Other on-chain perp protocols like Perp Protocol and GMX also use oracle-based pricing.<\/p>\n<h4 class=\"\" dir=\"auto\"><span class=\"ez-toc-section\" id=\"Lack_of_Traditional_Counterparties\"><\/span>Lack of Traditional Counterparties<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p class=\"break-words\" dir=\"auto\">Overlay does not require traditional counterparties to take the other side of a position. When a position is closed:<\/p>\n<ul class=\"marker:text-secondary\" dir=\"auto\">\n<li class=\"break-words\">Profitable positions prompt the protocol to mint OVL for payment.<\/li>\n<li class=\"break-words\">Loss-making positions result in the burning of the user\u2019s OVL collateral.<\/li>\n<\/ul>\n<p class=\"break-words\" dir=\"auto\">While this carries inflation risk, Overlay mitigates it through risk management mechanisms.<\/p>\n<h4 class=\"\" dir=\"auto\"><span class=\"ez-toc-section\" id=\"No_Limit_Orders\"><\/span>No Limit Orders<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p class=\"break-words\" dir=\"auto\">Overlay v1 does not support limit orders; only market orders are executable. Traditional CLOB or liquidity pool-based exchanges typically support limit orders.<\/p>\n<h4 class=\"\" dir=\"auto\"><span class=\"ez-toc-section\" id=\"Funding_Rates\"><\/span>Funding Rates<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p class=\"break-words\" dir=\"auto\">Overlay calculates funding rates based on open interest imbalances rather than spot-futures price discrepancies. These rates incentivize users to balance <strong class=\"font-semibold\">long<\/strong> and <strong class=\"font-semibold\">short<\/strong> positions, reducing imbalances.<\/p>\n<h3 class=\"text-xl\" dir=\"auto\"><span class=\"ez-toc-section\" id=\"Pricing_and_Price_Impact\"><\/span>Pricing and Price Impact<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p class=\"break-words\" dir=\"auto\">Overlay relies on oracle data for pricing, using mechanisms like TWAP (Time-Weighted Average Price), bid-ask spreads, and price impact\/slippage. TWAP prevents oracle manipulation, with short (e.g., 10-minute) or long (e.g., 1-hour) TWAPs selected based on price stability. Bid-ask spreads prevent frontrunning of short TWAPs and protect against sudden price spikes. Price impact is adjusted based on order size and market liquidity.<\/p>\n<p dir=\"auto\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-165750 aligncenter\" src=\"https:\/\/coinmuhendisi.com\/blog\/wp-content\/uploads\/2025\/08\/overlay-1.png\" alt=\"\" width=\"1349\" height=\"514\" \/><\/p>\n<h3 class=\"text-xl\" dir=\"auto\"><span class=\"ez-toc-section\" id=\"Risk_Management_Payoff_Caps_Open_Interest_Caps_and_Circuit_Breaker\"><\/span>Risk Management: Payoff Caps, Open Interest Caps, and Circuit Breaker<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p class=\"break-words\" dir=\"auto\">Overlay manages OVL inflation risk with the following mechanisms:<\/p>\n<ul class=\"marker:text-secondary\" dir=\"auto\">\n<li class=\"break-words\"><strong class=\"font-semibold\">Payoff Caps<\/strong>: Per-position limits on profit\/loss, set by the DAO for each market.<\/li>\n<li class=\"break-words\"><strong class=\"font-semibold\">Open Interest Caps (OI Caps)<\/strong>: Per-market limits on total open interest, determined by the community to quantify inflation risk.<\/li>\n<li class=\"break-words\"><strong class=\"font-semibold\">Circuit Breaker<\/strong>: Temporarily adjusts OI caps to cool markets after large payouts, limiting new position sizes.<\/li>\n<\/ul>\n<h3 class=\"text-xl\" dir=\"auto\"><span class=\"ez-toc-section\" id=\"Overlay_Protocol_Investors\"><\/span>Overlay Protocol Investors<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p class=\"break-words\" dir=\"auto\">Protocol has raised $2.22 million, backed by prominent investors such as Polychain Capital, ParaFi Capital, 1kx, The LAO, MetaCartel Ventures, Jets Capital, GTS Ventures, Ben Middleton, and Sky Wee. This strong support underscores the project\u2019s credibility in the DeFi community.<\/p>\n<p dir=\"auto\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-165749 aligncenter\" src=\"https:\/\/coinmuhendisi.com\/blog\/wp-content\/uploads\/2025\/08\/overlay.png\" alt=\"\" width=\"927\" height=\"219\" \/><\/p>\n<h3 dir=\"auto\"><span class=\"ez-toc-section\" id=\"Official_Links\"><\/span>Official Links<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li><a href=\"https:\/\/overlay.market\/\">Website<\/a><\/li>\n<li><a href=\"https:\/\/x.com\/OverlayProtocol\">X (Twitter)<\/a><\/li>\n<li><a href=\"https:\/\/blush-select-dog-727.mypinata.cloud\/ipfs\/QmVMX7DH8Kh22kxMyDFGUJcw1a3irNPvyZBtAogkyJYJEv\">Whitepaper<\/a><\/li>\n<\/ul>\n<p><script type=\"text\/javascript\" src=\"https:\/\/files.coinmarketcap.com\/static\/widget\/currency.js\"><\/script><\/p>\n<div class=\"coinmarketcap-currency-widget\" data-currencyid=\"23009\" data-base=\"USD\" data-secondary=\"\" data-ticker=\"true\" data-rank=\"true\" data-marketcap=\"true\" data-volume=\"true\" data-statsticker=\"true\" data-stats=\"USD\"><\/div>\n<p>&nbsp;<\/p>\n<p><em>You can freely share your thoughts and comments about the topic in the comment section. Additionally, please don\u2019t forget to follow us on our\u00a0<a href=\"https:\/\/t.me\/coinengineernews\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>Telegram<\/strong>,\u00a0<\/a><a href=\"https:\/\/www.youtube.com\/@CoinEngineer\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>YouTube<\/strong><\/a>\u00a0and\u00a0<a href=\"https:\/\/twitter.com\/coinengineers\"><strong>Twitter<\/strong><\/a>\u00a0channels for the latest news.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Overlay Protocol is a decentralized finance (DeFi) platform that enables users to build positions on markets or data streams without traditional counterparties (liquidity providers or market makers) taking the other side of the position. What Is Overlay Protocol? Built on the Arbitrum blockchain, this protocol offers markets based on non-manipulable and unpredictable numerical data feeds.<\/p>\n","protected":false},"author":29,"featured_media":48209,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[16,5],"tags":[1011,192,93,105,16873,22430,103,22264,22265,3344,22432,22431,205,4142,22433],"class_list":["post-48091","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-defi-projects","category-project-review","tag-arbitrum","tag-blockchain","tag-defi","tag-ethereum","tag-liquidity-providers","tag-market-makers","tag-nft","tag-overlay-protocol","tag-ovl-token","tag-perp","tag-planckcat-dao","tag-sports","tag-tokenomics","tag-trade","tag-what-is-overlay"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>What Is Overlay Protocol (OVL)? - Coin Engineer<\/title>\n<meta name=\"description\" content=\"Overlay Protocol is a DeFi platform that allows users to create positions on data streams without being a counterparty.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/coinengineer.net\/blog\/what-is-overlay-protocol-ovl\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"What Is Overlay Protocol (OVL)? 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