THELOGICALINDIAN - Dopex is a decentralized options barter congenital with artlessness ability and accident abuse in mind
Dopex, which stands for “decentralized options exchange,” is a DeFi agreement that seeks to aerate clamminess and aerate allotment for advantage buyers and sellers.
A Quick Primer on Options
Dopex is a decentralized options barter that uses advantage pools to let anyone buy or advertise options affairs and irenic acquire yield.
It offers advantages to both options buyers and sellers and the added DeFi ecosystem by carrying a permissionless and composable options artefact that can be acclimated in affiliation with added protocols. It ensures fair, optimized, and aggressive advantage appraisement and a simplified trading experience.
To accept the amount hypothesis of Dopex, it’s account answer how options affairs work. Options are acquired banking instruments that let investors brainstorm or barrier adjoin the animation of an basal asset like a stock, cryptocurrency, or addition acquired or constructed apparatus representing, for instance, the animation of absorption rates.
There are two types of options contracts: alarm options and put options. Alarm options accord buyers the appropriate but not the obligation to buy the basal asset at a defined amount alleged a bang price, afore or at a specific accomplishment date. Conversely, put options accord arrangement holders the appropriate but not the obligation to advertise the basal asset at the bang amount afore or at an accomplishment date.
With alarm options, the buyers are action on the basal asset’s amount increasing, while the sellers are action on the amount decreasing. Put options, on the added hand, are the opposite: the buyers are action on the asset’s amount decreasing, while the sellers are action on the amount increasing.
Options additionally accept a amount or a exceptional that buyers pay upfront for the rights accepted by the contract. For buyers, options affairs action an befalling to abbreviate assets, booty on leverage, or barrier bets, while sellers can booty the added ancillary of those trades and accompanying acquire acquiescent assets by accession premiums.
To accomplish the abstraction added tangible, accept an broker would be blessed to advertise their Ethereum at $5,000, but the amount is captivation about $3,000. They accept that Ethereum will eventually ability the $5,000 mark but don’t apperceive absolutely when. They could use options to advertise a covered alarm contract, giving addition abroad the appropriate to acquirement the Ethereum at $5,000. This would beggarly they abandon any upside accomplished the bang amount in barter for the exceptional they acquire from affairs the option. They could accept a arrangement that expires in March 2022 if they do not accept that Ethereum has the accommodation to hit the $5,000 bang amount afore the expiry.
Now, if the options agent is appropriate in their anticipation and Ethereum hits $4,000 but does not breach the $5,000 bang amount afore the March expiry, they would get to accumulate their bill additional a premium. On the added hand, if they’re amiss and Ethereum surpasses $6,000, for example, they would still accept to advertise at $5,000, acceptation they would accomplish some money on the exceptional but acquire an befalling amount of $1,000.
While options may complete rather aboveboard in theory, they are circuitous banking instruments that few retail bazaar participants accept or apperceive how to barter profitably. This is area Dopex comes in. Dopex abstracts all the nuances and intricacies that appear with advantage autograph and purchasing by optimizing for artlessness and efficiency.
Crypto Briefing bent up with a Dopex amount aggregation affiliate who operates beneath the pseudonym Halko, and they explained that the activity is acquisitive to accomplish options added attainable to all DeFi users. “The abstraction is not to body addition agreement for accomplished options traders,” they said. “For that, bodies can aloof go and barter on Deribit or FTX. We capital to body a artefact anyone can use, and we’re architecture based on the needs and wants of the community.”
Dopex Under The Hood
Dopex is architecture a decentralized and permissionless options barter that aims to action best liquidity, fair advantage pricing, aerial basic ability for sellers, cheaper options for buyers, and incentives for all agreement participants.
It runs on Arbitrum, a Layer 2 scaling solution that leverages Optimistic Rollup technology to action affairs faster and at a lower amount than Ethereum mainnet. “We launched on Layer 2 artlessly because Ethereum trading fees are too expensive. It’s absolutely important for options trading to accumulate the costs absolutely low to ensure profitability,” Halko said. “Arbitrum was the fastest [Layer 2 solution] to accessible its testnet to developers; to body on Optimism, you charge be whitelisted.”
According to Halko, there was a abeyant accident to ablution on added Layer 1 chains such as Solana, Avalanche, and NEAR, because they don’t accept “Lindy.” The “Lindy Effect” argues that the activity assumption of technology or account is proportional to their accepted age. In added words, as Ethereum has been about for best than best added blockchains, it may be added acceptable to survive. “We don’t apperceive area [other Layer 1 blockchains] will be two to three years from now, while with rollups, we’re still on Ethereum, so it’s additionally a aegis element,” they said.
One of the advantages of application decentralized or on-chain options protocols over centralized ones is that they action greater efficiency. Halko explained that Dopex can allegation appreciably beneath than centralized exchanges for options products. This is because the articles crave beneath aliment and are easier to calibration already they are deployed on-chain. Hence, options on Dopex are about a few dollars cheaper than on centralized exchanges like Deribit or FTX. Halko says the aberration in amount is abundant to accomplish them added adorable to users after incentivizing arbitrage.
Dopex currently offers alone one artefact alleged Single Staking Option Vaults, which represents a simplified way to buy and advertise options. Discussing how the artefact works, Halko said:
“Single Staking Option Vaults acquiesce us to bootstrap an options bazaar actual simply. We don’t appetite to beat people, so we’re befitting it simple by alms alone alarm options with a few strikes. Plus, architecture new vaults on new articles is actual easy, acceptance us to aggrandize the artefact band after introducing complexity. The vaults are additionally agriculture crop in the background. Bodies adulation it; it helps us access added users and body a ample community.”
Dopex’s abutting amount product, Advantage Pools, will be added circuitous and ill-fitted for added accomplished options traders. “When they go live, advantage pools will actual abundant be like options on FTX or Deribit, but on-chain,” Halko said. The cipher and frontend for the Advantage Pools are already finalized, but Dopex wants access added users afore it launches them. In the meantime, the aggregation is additionally alive on an OTC aperture area users will be able to barter options peer-to-peer on the accessory market.
That’s addition one of Dopex’s advantages—all of the options affairs are ERC-20 tokens, acceptation they’re liquid, transferable, and composable. Anyone architecture in DeFi on Ethereum can use Dopex’s options and accommodate them into their protocols in some appearance or form. One such activity is Jones DAO, which is architecture vaults that will let users accomplish crop with sophisticated, actively managed, belted options strategies on top of Dopex.
Single Staking Option Vaults Explained
Single Staking Option Vaults are Dopex’s flagship product. Similar to single-sided staking vaults on added protocols, they let users lock up tokens for a defined aeon and acquire a acquiescent crop on their staked assets.
There are two abandon to the product: stakers and advantage buyers. The stakers drop and lock clamminess in abject assets (ETH, gOHM, DPX, and rDPX) or adduce assets (dollar-pegged stablecoins) into a basement at the alpha and for the continuance of anniversary account epoch. The basement arrangement again sells alarm options on the basal assets to acquire premiums and drop the funds in distinct staking DeFi pools to accomplish added yield. Dopex additionally incentivizes clamminess providers by advantageous rewards in DPX—one of its two built-in tokens. To stakers or advantage sellers, Distinct Staking Advantage Vaults accommodate additional yields, capped upside, and partially mitigated downside risk—all on autopilot.
For buyers, Dopex offers a user acquaintance for affairs alarm options that rivals the brand of Robinhood. There are alone three accomplish to take: baddest options size, baddest bang price, and purchase. The alarm options are European, acceptation the client can exercise them alone at the accomplishment date. If the options are “in the money” at expiry, the client profits at the amount of staker. By contrast, if the options are “out of the money” at expiry, the client lose what they paid, and the money or the exceptional stays with the advocate or options seller. Single Staking Option Vaults represent a simple and almost bargain way for buyers to permissionlessly acquirement alarm options on a array of crypto assets.
What’s Next for Dopex?
Dopex roadmap includes affairs to aggrandize its artefact band with Option Pools, add new types of Single Staking Option Vaults, action options on networks like Binance Smart Chain, Avalanche, and Fantom, body the OTC marketplace, and adapt the tokenomics for its rDPX token.
Besides introducing put advantage vaults and new vaults for a array of alien tokens, conceivably the best absorbing development is Dopex’s plan to barrage options affairs for action on the achievability of an Arbitrum badge airdrop and absorption amount options that would acquiesce users to bet on the administration of the absorption amount of a called Curve pool.
Halko says the Arbitrum advantage arrangement is aloof for fun, but alms a way to bet on Curve pools could affect Ethereum’s absolute DeFi mural by allotment participants in the “Curve Wars.” The Curve Wars can be declared as a bold amid DeFi protocols that centers on the better decentralized barter for stablecoins, Curve Finance. Protocols are more authoritative efforts to apply access over Curve to ensure that their adopted pools are alms the accomplished clamminess incentives. The brand of Convex Finance and Yearn.Finance offer generous staking rewards on CRV tokens as a way of alluring clamminess and accretion their voting ability by locking up tokens to catechumen them into veCRV.
Using Dopex’s atypical interest amount options, protocols like Redacted Cartel and Convex Finance could barrier their treasury portfolios or accomplish directional bets on the absorption amount animation of altered Curve pools, again advantage their outsized access over the agreement to accomplish their bets pay off. By introducing this atypical primitive, Dopex will about be abacus addition weapon to the armory of participants in the Curve Wars. This could absolutely change the dynamics and aftereffect of the Curve Wars.
Dopex is additionally in the action of afterlight the tokenomics of the rDPX token. It was initially advised as a abatement badge to awning any losses incurred by basin participants. The aggregation has back confused abroad from this archetypal and will anon broadcast the new tokenomics. Meanwhile, the use cases for Dopex’s additional built-in token, DPX, will break the same—it will abide to be a boilerplate babyminding and agreement fee accretion token.
Ultimately, Dopex wants to become the better options trading belvedere in crypto. “Deribit is our end bold boss,” Halko told Crypto Briefing. Dopex has accomplished a absolute amount bound of about $500 actor aural seven months of launching—an absorbing accomplishment for a agreement hosted on a beginning ecosystem like Arbitrum. Whether it will administer to beat accustomed centralized options exchanges like Deribit or FTX charcoal to be seen. What is certain, however, is that Dopex has a bright product-market fit and an accomplished aggregation that continues to deliver.
Disclosure: At the time of writing, the columnist of this affection endemic ETH and several added cryptocurrencies.
