It is clear now that CeFi is going to be disrupted and at a speed and scale they are not going to be prepared for. This disruption creates huge opportunities. Centralised derivatives and options are an enourmous market and growing rapidly so a decentralised protocol has the potential to capture some of this market disruption.
What it does
Optyn is protocol that allows an option market to be created for any Chainlink price oracle, collateralized with any ERC20 or BEP-20 tokens.
Options have been around since the time of Aristotle and are used to hedge a portfolio and for speculation. They give the buyer the right but not the obligation to buy or sell the underlying asset at leverage.
Option terminology can put people off (puts/calls/greeks etc.) but they aren’t complicated so we have strived to make the UI as simple as possible.
If you expect the price to rise you go up you buy a long(call) and if you expect the price to fall you buy a short(put). The period of holding determines how long the option is valid for before it expires. If an option is on the right side of the strike price and hasn’t expired it can be exercised and the option holder is paid out in the underlying asset.
What can I trade?
An option market can be created for any Chainlink price oracle. Currently this includes:
- Crypto currencies: Bitcoin, Ethereum, Litecoin, Xrp …
- ERC20 tokens: Binance, Chainlink, Uniswap, Sushiswap …
- Forex: GBP, AUD, CHF, EUR, CNY, JPY, KRW …
- Indices: FTSE, Nikkei, Total crypto market cap …
- Commodities: Gold, silver, oil …
- Etheruem gas and …. any new Chainlink price oracles as they are created. The sky is the limit!
How we built it
Optyn(pronounced “option”) is a fork of the the Hegic protocol which successfully launched an on chain options protocol for ETH & BTC only. It was refactored to support the ERC-1155 multi token standard for the token pool and generalised so that a market could be created from any combination of a Chainlink oracle & token pool.
The front end is built with Vue.
Apart from Rinkeby the other testnets the protocol has been successfully deployed to are the Binance Smart Chain & Polygon.
Challenges we ran into
Option prices are typically priced using something called Implied Volatility(IV). As demand for options increases the IV goes up, making options more expensive. There is currently no source of this information on(or off) the blockchain. I had to find a solution that could work for all the various oracles that could be created using information in the protocol.
I also had issues with getting it working on the Plasm & Moonbeam testnets.
Accomplishments that we're proud of
The protocol is very close to be ready for mainnet usage.
What we learned
Things take much longer than you expect! But then I already knew that :D
What's next for Optyn
It is currently being tested on the Rinkeby, Binance Smart Chain & Polygon testnets. The first mainnet release will likely be the Polygon. Followed by the Eth mainnet when there has been an audit and it is stable.
Hackathon Submission Video
https://www.youtube.com/watch?v=cFOm8hOI_GM - who am I, what problem I tried to solve, where is the project at now