Thread by @wadepros

Squeeth is a DeFi-native option.

Everlasting Options → Power Perpetuals → "Squeeth" (ETH²)

Four ways to Squeeth:

• Long Squeeth
• Short Squeeth
• Automated Squeeth Strategies
• Uniswap v3 SQTH-ETH Liquidity Providers

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Squeeth is part option, part perpetual swap, but removes major pain points associated with each instrument

Unlike options, there are no strikes or expiries, rolling costs, or liquidity fragmentation

Unlike perpetual swaps, there is leverage without liquidations on the long side

Squeeth basically takes options & removes strikes and expiries to create a single ERC20 representing the entire options chain

It can be thought of as offering pure convexity. Squeeth has constant gamma exposure, so it offers consistent optionality regardless of the price of ETH

Squeeth is perpetual exposure to ETH² rather than ETH (e.g. if the price of ETH 5x, Squeeth will 25x)

Compared to a 2x leveraged position, longs make more ETH goes up & lose less when ETH goes down (excluding funding).

blue: squeeth
red: "normal" 2x leverage

Long Squeeth:

Long Squeeth gives traders a leveraged position with unlimited ETH² upside, protected downside, and no liquidations. It's similar to always holding an at the money call option - you have constant gamma exposure.

Longs pay a funding rate for this position (in-kind)

Short Squeeth:

Short Squeeth is short an ETH² position. Traders earn a funding rate for selling ETH collateralized Squeeth, paid by long Squeeth holders. It’s similar to always selling an at-the-money straddle except you have constant gamma exposure.

Automated Squeeth Strategies:🐂🦀🐻

Squeeth strategies are a collection of perpetual yield strategies for any market condition that allow users to earn yield, paid by the daily funding rate of Squeeth buyers. Simply deposit ETH and the contract automatically manages the strategy

*it's important to note that while traders can't be liquidated on the long side of Squeeth, if short Squeeth positions fall below the safe collateralization threshold (150%), they are at risk of liquidation.

Uniswap v3 SQTH-ETH Liquidity Providers:

Liquidity providers can earn LP fees for providing SQTH-ETH liquidity. Users can mint Squeeth and deposit Squeeth + ETH into the Uniswap V3 SQTH-ETH Pool.

Then.. deposit LP as collateral to mint even more SQTH, aka the SQTH-GO-ROUND 🔁

Opyn’s goal is to enable any team to utilize Squeeth's infra. There will be a few foundational strategies (crab: neutral exposure to ETH, bull: positive exposure to ETH, bear: negative exposure to ETH), but integration teams can adjust any parameter to create their own strategy!

I skipped over a lot of context and there's so much more to discuss, but I'm excited af for all the yield strategies, automatic hedging calculators / interfaces, and other creative ideas that will be built on top of squeeth.

Basically I like the squeeths 😻

Squeeth is the first "Power Perpetual," a DeFi derivative invented by @opyn_ @_Dave__White_ @danrobinson in July at a research summit between Opyn & @paradigm.

Check out the research paper ↓ paradigm.xyz/2021/08/power-…

🧠💭 ↓

https://twitter.com/wadepros/status/1454141883526045697?s=20