Introducing Opyn Developer Toolkit
Opyn announced the release of Opyn’s Developer Toolkit, a suite of resources to make it easier for developers to build options products in DeFi.
BUIDLIng in DeFi just got easier! Since launching v2, they’ve been talking to some amazing devs about building really cool projects on top of Opyn. You can check out some of previous blogs (What to BUIDL I, What to BUIDL 2) for some idea inspiration. They’ve been protocol-first for a while and they want to improve the developer experience even more!
Recently with the launch of awesome projects such as Ribbon and Opethand Dave White’s Everlasting Options paper, they’ve received a bunch of interest from developers wanting to build the ideas they’ve listed out, but had a hard time getting started. To make building easier, they’ve taken inspiration from Austin Griffith’s Scaffold ETH and Uniswap’s Periphery contracts to create a suite of resources that make it easier for developers to get started. They plan to keep adding to the Developer Toolkit, so expect more resources, templates, and starter contracts soon!
Learning Resources
Options are an incredibly versatile financial instrument — in fact you can create any financial payoff using just put and call options. Options can also earn money in any market condition, pretty cool right? Here are some great resources to get started with learning about options:
Opyn Developer Toolkit
The purpose of the Developer Toolkit is to provide developers with a suite of resources to make it easier to build options products in DeFi. Below are the initial pieces of the toolkit they are releasing at launch. They plan to continue building tools, templates and utilities to improve the developer experience on Opyn.
Vesting Call Options
Use Opyn v1 to create physically settled vesting options for DAOs to emulate options given to startup employees for equity.
An employee option is the right for employees to buy shares of stock in the company at a predetermined price in the future. Or put another way, options are the way in which you purchase shares of stock in the startup. For DAOs, vesting options are a way to align incentives and reward stakeholders. DAO vesting options can help:
- Attract and retain the best possible talent
- Promote the achievement of key strategy and financial performance
- Motivate long-term value creation; and
- Align the interests of parties receiving token compensation with all stakeholders
Liquidation Bot
Opyn is launching the first-ever on-chain margining system for partially collateralized options on Tuesday, June 29. The upgrade will allow options to be collateralized with less than their max loss (<1 asset for call, <strike for puts), increasing capital efficiency and leverage for DeFi options.
Sellers must maintain a minimum amount of collateral in their vault to secure the options they have sold. If a seller fails to do so, their vault may be liquidated: their collateral will be seized and auctioned off to repay their debts.
Liquidation bots can be used to discover undercollateralized vaults and earn a profit by liquidating someone at a price that is higher than the fair price in the market.
With partial collateralization, sellers must maintain a minimum amount of collateral in their vault to secure the debt they owe. If a seller fails to do so, their vault may be liquidated and their collateral will be seized and auctioned off to repay their debts.
Uniswap v3 Partially Collateralized Option Liquidity Pool for Opeth
Uniswap V3 can be a very capital efficient AMM for assets that have bounded prices. One such product that has recently launched is Opeth, which combines an Opyn option with ETH, to create a minimum value structure.
With the launch of Opyn’s partially collateralization, they will be launching a partially collateralized 31-Dec 1280 Opeth vs ETH univ3 pool that will allow people to protect their ETH by swapping from ETH to Opeth as well as trade the underlying option that makes up the Opeth in the pool. This is meant as a proof of concept experiment and framework to demonstrate how option structures with bounded values can be traded on Univ3 in a more capital efficient manner, especially so when less capital is required to mint the options as compared to max loss margin.
ETH vs Opeth has a minimum price of 1ETH per 1Opeth, which occurs when the option is worthless and 1 ETH = 1 ETH. It does not have a maximum price as if ETH goes to 0 infinite ETH would be required to purchase 1 Opeth, as Opeth’s minimum value is the option strike.
However, you can LP on univ3 with tighter bands if you have confidence in the asset range. For our pool, we plan to seed with a LP range of 1–1.71, which corresponds to an ETH price of ~750 and higher at expiry of the option. If ETH drops to lower than 750, LPers using a range of 1–1.71 will own 100% ETH and will have sold all of their Opeth. This breakeven is higher prior to expiry, due to time value, so if ETH dropped tomorrow, you would own 100% ETH at a higher price than 750.
In conjunction with the bounded liquidity, they will be launching this pool using partially collateralized options, which will allow more capital efficiency from a pool of this structure.
The LP profile is fairly benign as IL is well bounded, particularly above the strike of the option and in many scenarios with sufficient trading volume LPs could make a positive return on capital, especially since they can reduce capital requirements by partial collateralization as well as Univ3 ranged liquidity.
Existing Projects Building on Opyn
Earn high yield on your cryptoassets with automated option strategies
Fuse put options with underlying collateral to issue stablecoin loans
Earn high yield on ETH. Each week Fontis’ vault mints Out Of The Money (OTM) call options for depositors.
Optional lets users deposit funds into managed vault-style tokens. Depositors earn yield while the social trader manages the vault strategy. Optional’s first vault uses a covered call strategy.
Twitter bot that that tweets live trades and platform analytics. Created by Krugman.
Advanced options chain, oToken Factory, and OTC trades
Powerful interface for users to keep track of their Opyn v1 positions and engage in advanced trading
What is Opyn?
Opyn is a capital efficient DeFi options protocol that allows users to buy, sell, and create options on ERC20s.
📰 INFO:
https://medium.com/opyn/introducing-opyn-developer-toolkit-2bfd5bcc7a92
