🎧 The Rise of DeFi Options: Insights from 0xSaitama
Round Table Recap: Wednesday, February 15th
Options. Life Is All About Options.
How Often Do You Choose Decentralized Ones?
0xSaitama Joined Us To Discuss Dopex & DeFi Innovatooors 👇
You can listen to the full audio here
• Guest - 0xSaitama ( Twitter : 0xsaitama_ )
• Host - Kadeem Clarke ( Twitter : @Crypto_Clarke )
0xsaitama dabbled in crypto around the end of 2020-21.
He is a new user who jumped straight into the bull run with 60,000 APY and other ridiculous offers by protocols.
This excited him about the DeFi space and made him want to understand where it came from and how many APYs they could sweep up.
After realizing it was a scam (in short), 0xsaitama stumbled upon Petronode.
He found out that Petronode was an options derivative on Arbitrum and was instantly intrigued.
From there, he joined Discord Dopex, learned about options, and started contributing to the content side for Dopex. This content included threads and other pieces.
After getting noticed by the team at Dopex, he was hired for content creation.
He says Dopex is very community-driven but also wants to change the space in new ways with options.
They invite innovative models for options. He says Dopex can mold options to any position that you want. He uses the example, “I believe ETH will be at $2000 next week”.
What is your role at Dopex?
0xsaitama emphasizes that creating content can bring you more opportunities, especially if you’re constantly shilling a project.
0xsaitama started as a content writer before swiftly moving on to articles.
He says that writing compelling articles on options was a rabbit hole he went down.
He says he learned while creating and used this knowledge to explain to newcomers about Dopex, acting as a teacher.
What are options?
0xsaitama explains that options are a financial tool and a derivative of holding an underlying asset.
He says that you’re making a contract with another party as a buyer or seller, and as a writer of the option, you’re taking one side of the contract.
He mentions that the side you take at Dopex is either selling a call or selling a put.
On the buyer’s side, when you’re purchasing a put, you’re bullish, and when you’re purchasing a call, you’re bearish.
Example: “I want to purchase $ETH for $2000 at the end of the week”. If ETH is over $2000 at the end of the week, however much it’s up by your profit. If ETH is $2200 at the end of the week, you make $200. If ETH is under $2000, you don’t have the option to purchase it. This works vice versa for short positions.
He explains that options are super composable, and one of those strategies that Dopex utilizes is straddles that enable users to bet against or for volatility.
Example: ETH is $1500, and you believe it will move to the upside or downside in the next few days. You can, therefore, buy puts and calls based on whether the price goes up or down, and you make the difference in price from when you placed the option ($1500) to when the option expires (Price may have moved to $1700).
🎧️ Audio clip on intro to crypto options 👇️
What’s the state of the DeFi options space?
0xsaitama says that TradFi is easier because they use AMMs, while liquidity is harder to obtain in DeFi.
He says options must always be fully collateralized, and because of the variety of parameters, many holes can fragment the liquidity.
0xsaitama says Dopex is looking into concentrating the strikes and making the collateral more efficient.
He says that because the collateral is open when the position is open, Dopex introduced an instrument that takes the collateral within the option and uses it in other DeFi premiums, such as GMX.
Dopex wants to be the layer of options while also providing liquidation liquidity in DeFi.
Dopex is also launching its perp options lending platform, allowing them to purchase a PUT option and borrow within the option infrastructure.
Another pointer Dopex is doing is option perps, where you can sell a PUT and buy a CALL option, replicating a synthetic long position.
Option scalps are also something Dopex brings to the space, allowing users to profit from those differentials.
🎧️ Comprehensive guide on understanding options 👇️
🎧️ Exploring DeFi options and liquidity 👇️
More on Dopex
0xsaitama says every option protocol is taking its own path.
He believes that Dopex is on the right path.
He says pricing options on-chain is very complicated, but it comes down to volume.
He says you need bids and asks to arbitrage the differential between both positions.
Once you do this, you have a fair price for both sides.
Either side could be overpaying or underselling an option, and someone who doesn’t understand options is being taken advantage of.
0xsaitama says Dopex fixes this by pricing the options off Deribit, somewhere with significant volume.
🎧️ Exploring the future of Dopex in the space 👇️
Going forward, what product or innovation are you looking forward to most?
0xsaitama says he is super bullish on products on Arbitrum.
He also emphasizes that he is building a DEX for Arbitrum unlike any other out right now.
They’re adding an options layer with the knowledge he has gained from Dopex.