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Eli5DeFi

@eli5_defi

May 16, 2022 • 19 tweets • 36 min read • Read on X

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How do #Options work? How to include options into your strategy? Why do we need options products in #DeFi?

We cover all of the basics you need in our latest visual guide, decentralized options.

(1/17)

#Cryptocurrency #Bitcoin #Ethereum #AVAX #BNB #Derivatives

An option is a #contract giving the investor the right, but not the obligation, to buy or sell an underlying asset at a specific price on a certain time period. Investors must pay a premium to get the contract.

(2/17)

#Cryptocurrency #Bitcoin #Ethereum #AVAX #BNB #Derivatives

The option writer is the seller of an option who opens a position to collect a premium payment from the buyer of the options contract.

(3/17)

#Cryptocurrency #Bitcoin #Ethereum #AVAX #BNB #Derivatives

Call options are right to buy an asset at the strike price and specific time period. If buyers think that the price will go up, they buy call options. Conversely, put options are right to sell an asset.

(4/17)

#Cryptocurrency #Bitcoin #Ethereum #AVAX #BNB #Derivatives

Buyers can be profitable if the current price in the money (ITM), for call options will be above the strike price and put is below the strike price. Out of the Money (OTM) means the contract is worthless.

(5/17)

#Cryptocurrency #Bitcoin #Ethereum #AVAX #BNB #Derivatives

In this example, we can see how call options made a significant profit for Jack in ITM conditions.

(6/17)

#Cryptocurrency #Bitcoin #Ethereum #AVAX #BNB #Derivatives

However, ITM also doesn't mean all profit as the cost of premium and transaction fee should be considered. In this example, Lana is in ITM but she is not reaching breakeven and suffered a loss.

(7/17)

#Cryptocurrency #Bitcoin #Ethereum #AVAX #BNB #Derivatives

In OTM conditions, the loss is expected as the contract is deemed worthless but the maximum loss will be the amount of premium paid if it is not exercised.

(8/17)

#Cryptocurrency #Bitcoin #Ethereum #AVAX #BNB #Derivatives

Another reason to buy the put options is to hedge against volatility and act as an insurance for underlying assets.

(9/17)

#Cryptocurrency #Bitcoin #Ethereum #AVAX #BNB #Derivatives

There are also covered and naked options, however in cryptocurrency options contracts come in the form of covered options as they are collateralized by crypto assets.

(10/17)

#Cryptocurrency #Bitcoin #Ethereum #AVAX #BNB #Derivatives

There is also a difference in settlement style, the European style exercises the contract ONLY at the end of expiration date meanwhile the American style could exercise it anytime during the contract period.

(11/17)

#Cryptocurrency #Bitcoin #Ethereum #AVAX #BNB #Derivatives

Options contract will make your strategy more diverse, as it has the potential to reap large benefits at a fraction of the price. Some also strategically deploy the options to hedge their assets in volatile markets.

(12/17)

#Cryptocurrency #Bitcoin #Ethereum #AVAX #BNB #FTM

Decentralized Options (DO) enable options trading strategies in a non-custodial manner by utilizing smart contracts in the blockchain.

(13/17)

#Cryptocurrency #Bitcoin #Ethereum #AVAX #BNB #FTM #Arbitrum #Solana #OptionsTrading #Optimism

DOVs are one of the core products in DO protocols. Assets provided are locked up in the vault and will be managed by protocol into automated options strategies.

(14/17)

#Cryptocurrency #Bitcoin #Ethereum #AVAX #BNB #FTM #Arbitrum #Solana #OptionsTrading #Optimism

DOVs rely on the trading volatility and the yield generated is organic and sustainable. It is a breakthrough for DeFi as it not dependent on the distributions/ token inflations.

(15/17)

#Cryptocurrency #Bitcoin #Ethereum #AVAX #BNB #FTM #Arbitrum #Solana #OptionsTrading

Options trading is also facilitated in several DOs. All processes will go through a smart contract from the creation contract until settlement.

(16/17)

#Cryptocurrency #Bitcoin #Ethereum #AVAX #BNB #FTM #Arbitrum #Solana #OptionsTrading

Understanding how options work will enrich your strategy. By practising careful risk management you can have significant profit with limited risk.

(17/17)

#Cryptocurrency #Bitcoin #Ethereum #AVAX #BNB #FTM #Arbitrum #Solana #OptionsTrading

@opyn_

Below is the list of Options Protocol in DeFi:
@opyn_
@HegicOptions
@ribbonfinance
@Buffer_Finance
@dopex_io
@DAOJonesOptions
@FODLfi
@PolynomialFi
@Katana_HQ
@Opium_Network
@PremiaFinance
@lyrafinance
@StakeDAOHQ
@AuctusOptions

Full list:
defillama.com/protocols/Opti…

@tztokchad

This visual guide had many references from the account below:
@tztokchad
@snarkyzk
@0xBarry
@Tetranode
@antonttc
@0xmjs
@phtevenstrong
@The_ReadingApe
@PlutusDAO_io
@tz_binance
@0xAlexEuler
@thedefiedge
@JiraiyaReal

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More from @eli5_defi

Eli5DeFi

@eli5_defi

May 22

Disappointed with airdrops and points? Raise your hand!

Many of us feel duped by the paltry amounts we get after completing tons of tedious tasks.

But what if you could flip the script and profit?

You're in for a treat👇🏻

►Points and Airdrop Meta is Here to Stay, But...

Points and airdrops have become the new norm.

They reward early adopters and drive platform growth by incentivizing key activities.

However, these points often leave stakeholders frustrated, impacting everyone from users to project developers.

Is there any better way to solve this?

Yes, it is. It's called points tokenization.

► Points Tokenization

Several solutions, such as points secondary markets, already exist, but they come with limitations:

- Platforms require extra collateral and cap buyer payouts.
- Fixed-rate protocols block point resales, creating liquidity headaches for sellers.
- Some markets restrict individual point trading, stifling user flexibility.

And @RumpelLabs' points tokenization sweeps these issues away for good.

Read 16 tweets

Eli5DeFi

@eli5_defi

May 8

Meet Eli, a native in the world of crypto and also working as digital nomad.

And he has one big problem: he can't spend his magic internet money in real life.

So, what's the solution?

(Spoiler: Massive perks and incentives await)

Let's dive in to find out 🧵

1/ Beyond philosophical reasons, tangible hurdles keep crypto users steering clear of traditional finance:

- Security and privacy concerns
- Asset control and custody
- Crypto-to-fiat conversion friction and restrictions
- Excessive fees and delays
- Limited global reach

These issues are prompting Eli and countless others to rethink cashing out their crypto for everyday use.

2/ Now, imagine spending your crypto in the real world just like cash.

@Godefi_me makes it happen:

✦ A non-custodial, worldwide debit card
✦ Seamlessly connects to your crypto wallet (starting with @solana, more chains to come)
✦ In partnership with @Mastercard, shop with 3 million+ merchants across the globe
✦ Works with mobile pay options like Apple Pay and Google Pay
✦ Earn direct rewards when using the card

Read 13 tweets

Eli5DeFi

@eli5_defi

Feb 26

All you need to know about @SonicLabs and its ecosystem.

Covering tech, bridging, the ecosystem, and maximize your $S airdrop.

A no-nonsense guide. 🧵

► What in The World is @SonicLabs?

From the outside, Sonic appears to be a high-performance EVM Layer 1 Blockchain.

However, it's not just about impressive technology; it also offers sustainable incentives, creating a thriving ecosystem that rewards its users and builders.

That said, Sonic's tech is indeed impressive:

✦ 10,000 transactions/sec
✦ Finality in <1 second
✦ <$0.01 fees per txs
✦ User incentives: Total 200M $S for whitelisted assets
✦ Fee Monetization: developers earn 90% of app gas fees

► Sonic Traction (Data per Feburary 26, 2025)

✦ With that said, Sonic TVL grow by ~3500% since start of the year (currently at ~$670M at the time of writing)
✦ 30.7M+ total transactions
✦ 70.3k+ contracts deployed
✦ 847k+ unique address
✦ 461k+ $S FeeM distributed
✦ Total of $150M+ bridged from DeBridge alone

And it seems like it's just the beginning for Sonic so far.

h/t @sealaunch_ , @DefiLlama, @deBridgeFinance, @0xKhmer

Read 15 tweets

Eli5DeFi

@eli5_defi

Feb 4

RWA is set to transform global finance with unmatched speed.

At the upcoming Ondo Finance Summit, major players from Traditional Finance and DeFi will outline the future of RWA.

This is the pivotal event that will redefine the world.

Don't miss out.

Let's dive in 🧵

► Join Ondo Summit Now

Before we move on, mark your calendars and attend the Ondo Summit happening on February 6th.

The event features top-tier speakers from both TradFi and DeFi, including @BlackRock, @WisdomTreeFunds, @PanteraCapital, @fidelity, @ripple, @CarolineDPham, @FTI_US, and others!

Set your notifications for the live stream below ⬇️

► But Why RWA and Ondo?

We're already witnessing the revolution initiated by RWA.

According to @RWA_xyz, tokenized RWA on-chain has seen substantial growth:

→ Over $16 billion in total RWA assets on-chain
→ More than 82,000 total holders
→ Private credit and U.S. treasuries are the leading asset classes, valued at over $11.5 billion and $3.5 billion, respectively

These figures are expected to multiply significantly, potentially exceeding $10 trillion by the end of this decade or even more!

And @OndoFinance is at the epicenter of this new era.

Read 13 tweets

Eli5DeFi

@eli5_defi

Jan 21

RWA is set to reach a trillion-dollar market valuation by the end of the decade and will fundamentally transform the financial landscape as we know it

And @OndoFinance is positioned to emerge as the leading protocol in the RWA space

Want to know why?

Let’s dive 🧵

1/ ► RWA Potential is Massive

Real World Assets (RWA) in the realms of Crypto and DeFi offer enormous potential, with a market cap possibly surpassing $10 trillion.

Nonetheless, it's important to recognize that RWA protocols differ greatly and confront many hurdles that prevent them from being widely adopted.

2/ ► Key Factors of RWA Protocols:

▶️ Adherence to legal and regulatory compliances
▶️ Seamless integration with the RWAFi Ecosystem
▶️ A broad and varied product portfolio

These essential elements for RWA to thrive are all possessed by @OndoFinance.

Read 12 tweets

Eli5DeFi

@eli5_defi

Jan 9

DePIN set to become the leading narrative on 2025.

The growth potential is predicted to be enormous with the accelerated crypto adoption.

Amidst this shift, @weRoamxyz has already positioned itself as the top DePIN Wireless protocol.

Up for a journey? 🧵

1/ ► Roam 101

@weRoamxyz is at the forefront of a DePIN wireless protocol on @solana.

Their goal is to create a decentralized worldwide network leveraging OpenRoaming technology that's secure, seamless, and driven by the community.

We've covered what Roam is in great detail in our earlier post, which you can explore right here ⤵️

2/ ► Latest Stats
In @MessariCrypto's State of DePIN report, Roam emerged as the third leading DePIN protocol on @solana.

Notably, because it's hitting significant benchmarks:

🔹 1.2+ million active nodes.
🔹 91.6+ million worldwide WiFi hotspot connections
🔹 1.9+ million users signed up

Read 15 tweets

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