Opyn V2 is expected to be released at the end of the year. Learn about the main features of the new version.
Original title: ” New DeFi gameplay丨3 minutes to understand the DeFi option agreement Opyn v2 version “
Written by: Opyn
Compilation: Porridge Overnight
Opyn v1 can be said to be one of the earliest DeFi option agreements on the market. Through this agreement, anyone can create, buy and sell options for any ERC20 token. Nevertheless, Opyn’s current market share in the decentralized options market is not very large. ideal.
In this regard, the Opyn project team developed the v2 version of the protocol, which aims to lay the foundation for a more efficient and highly liquid option protocol (Note: Opyn v1 will still run on the Ethereum mainnet).
It is reported that the current Opyn v2 contract is under audit. This article will provide an overview of Opyn v2:
- European cash settlement options;
- Margin improvement (spread!)
- Automatically execute currency options when they expire;
- Income (and governance tokens) as collateral;
- Call options without multipliers;
- Operator allows the contract to act on behalf of the user;
- The oracle used for option settlement price;
- Flash mints;
- Deterministic option contract address, name, symbol;
- If the product has been whitelisted, anyone can create a new option;
European cash settlement options
The v2 version of Opyn moved to cash-settled European-style options to improve margin by allowing safe construction of spreads.
European options mean that the holder of the option can only exercise the option when it expires. Although this seems restrictive (pre-exercise is not allowed), considering sufficient liquidity, selling American options is almost always more profitable than pre-exercising, because early exercise of options will lose your time value. For example, assuming a 0% interest rate situation: For example, you have a put option for 1 unit of ETH 500 USD, and then the price of ETH drops to 400 USD. In a liquid market, the lowest price of this ETH put option is about 100 USD, otherwise arbitrage. For example, the price of this ETH 500 USD put option is 80 USD. You (or any market maker or arbitrageur) can use 400 USD to buy 1 ETH, and then 80 USD to buy 1 unit put option. In American options, the arbitrageur can immediately exercise the option, earning a profit of $20 in the process. If it is a European option, the arbitrageur must hold the option to expire but lock in a profit of $20.
Cash settlement means that the option holder does not have to provide the underlying asset to exercise the option. On the contrary, options are settled in collateralized assets, and the option holder obtains the difference between the expiry price of the underlying asset and the strike price from the option seller.
Margin improvement
Opyn v2 lays the foundation for more capital efficient options starting from spreads. The spread enables long oToken to mortgage short oToken, thereby improving capital efficiency.
Automatic execution of currency options at expiry
The agreement now has the function of automatically executing currency options, so option holders do not need to take action before or when they expire. At maturity, the income of long and short option holders will be calculated, and can be redeemed at any time after the income is finally determined at the settlement price.
Income (and governance tokens) as collateral
The agreement now allows farming income assets (such as cToken, aToken, yToken, etc.) to be used as collateral for options, and allows farmers to harvest oTokens that have been obtained and airdropped. The first batch of options launched in the v2 version will be collateralized by USDC, but shortly after the initial issuance, we will issue yield-based mortgage options.
Call option without multiplier
Opyn v2 allows call options without any multipliers, so 1 call option oToken will correspond to 1 underlying asset unit (for example, 1 call oToken for 1 ETH corresponds to 1 call option for 1 ETH).
Operator allows the contract to act on behalf of the user
Operator is a smart contract function that allows users to delegate control of their treasury to a third-party smart contract.
Oracle machine for option settlement price
Cash settlement requires the use of oracles to determine payment due. The structure of Opyn v2 is universal to allow different oracles to be used for different assets. Initially, this will introduce ETH-USDC options with USDC as collateral. These will use Chainlink oracles to obtain ETH prices.
Flash mints
Since the vault mortgage is checked at the end of the transaction, as long as the options are burned before the end of the transaction, the options can be cast without collateral.
Deterministic option contract address, name, symbol
The v2 version allows specific oToken details to determine the address, name and symbol and each oToken. For example, a 300 strike WETH put option that expires on December 25, 2020 is represented by the following symbol: oWETHUSDC/USDC-25DEC20–300P
If the product is whitelisted, anyone can create new options
product is the combination of the underlying asset, exercise asset, and mortgage asset of the specified option, and whether it is a call option or a put option. For any product in these whitelists, anyone can create a new option and specify a strike and expiration date. The expiration time is currently fixed at 8 am UTC to prevent the dispersion of various expiration liquidity within the same day.
Vulnerability rewards and v2 release time
It is reported that the core smart contract of Opyn v2 has been completed and will continue to accept Open Zeppelin’s audit and Certora’s formal verification.
Security is still one of the top priorities, so before the release of Opyn v2, the project team decided to launch a bug reward program with a total of 100,000 US dollars.
According to optimistic predictions, Opyn will release the v2 version at the end of 2020, and it will wait for the official announcement. ( Github link )
Source link: medium.com
