Why Now?
To date, no options protocol has sustainably captured the imagination of DeFi users. The most popular optinos protocol, Aevo, reached less than $100mm cumulative volume. Meanwhile, CeFi options venues such as Deribit and PowerTrade transact billions of notional each month.
| Name | Cumulative Volume |
|---|---|
| $66.48m | |
| $51.72m | |
| $44.36m | |
| $16.74m | |
| $8.58m | |
| $6.35m | |
| $715,523 | |
| $656,377 | |
| $87,511 | |
| $1,909 |
Ethena Revolution
Ethena, the "internet bond", has revolutionized the availability of CeFi liquidity in DeFi products. By innovatively separating the functions of minting/redemption and trading, Ethena offers a new model for tokenized representations of derivative instruments. The existing Ethena product is a fully-collateralized short perp positions. This same model can be expanded to include both different collateral types and different derivatives instruments.
Suitability for On-Chain
Options are particularly suited for DeFi. Blockchains can move slow, but because of the inherent leverage in options, speed is less of a constraint. Further, complex instruments like perpetual swaps have proven difficult to port on-chain without introducing novel trust requirements.
Hedging portfolios for abrupt market moves is a common use case for options and should be made available to on-chain users.