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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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Eli5DeFi

@eli5_defi

Oct 15

➥ x402 Revival: The Internet’s Native Payment System

The internet always had a payment code called HTTP 402, but it was never activated.

x402 finally activates it, turning the web into a programmable payment layer for both humans and AI agents.

Everything you need to know about x402 in 30s 🧵

— — —

► What is x402?

x402 is an open payment protocol by @coinbase that enables instant stablecoin payments over HTTP (Hypertext Transfer Protocol).

It activates the unused HTTP 402 Payment Required code, originally meant for online payments.

The name means “extended 402”, a modern version of the HTTP 402 code built for digital payments.

With x402, websites, APIs, and AI agents can send or accept payments instantly without accounts or intermediaries.

Core features:
▸ Instant settlement: Payments confirm within seconds
▸ Zero protocol fees: No base-level charges
▸ Blockchain-agnostic: Works across @base, @solana, @0xPolygon, and more
▸ One-line setup: Accept crypto payments with a single line of code

—

► How it Works

x402 works through standard HTTP requests and responses.

❶ Request: A user or AI agent requests a paid resource.
❷ Response: The server returns an HTTP 402 code with payment details in JSON.
❸ Payment: The user sends $USDC through an x402 facilitator like Coinbase.
❹ Verification: The server verifies payment using /verify and /settle endpoints.
❺ Access: Once confirmed, access is granted instantly.

—

► Why It Matters

The internet never had a native way to process payments.
Developers depended on cards, ads, or subscriptions that were slow and expensive.

x402 changes this with instant, usage-based payments between users, APIs, and AI agents. It removes intermediaries and lets value move as easily as data.

It enables real micropayments, where users pay per API call or file instead of monthly subscriptions. As AI agents start transacting independently, x402 becomes the foundation for fast, programmable online commerce.

—

► AI Agents and Adoption

AI agents use x402 to pay for compute, storage, and data in real time.
They also trade services in agent-to-agent marketplaces and power in-game transactions, where NPCs can buy and sell assets automatically.

Developers use x402 SDKs in @TypeScript or @PythonPr and sign payments through CDP Wallet API or viem/ethers.

Adoption in the last 30 days:
▸ 43,000+ transactions
▸ $50,000+ total volume
▸ 300+ buyers
▸ 190+ sellers

—

► Ecosystem

➤ Client-Side Integrations
▸ @heurist_ai
▸ @thirdweb

➤ Services / Endpoints
▸ @AEON_Community
▸ @AurraCloud
▸ @onbonsai
▸ @firecrawl_dev
▸ @itsgloria_ai
▸ @neynarxyz
▸ @pinatacloud
▸ @questflow

➤ Ecosystem Infrastructure & Tooling
▸ @1shotapi
▸ @CoinbaseDev
▸ @daydreamsagents
▸ @fluora_ai
▸ @LatinumAI
▸ @mcpaytech
▸ @mrdn_finance
▸ @PayAINetwork
▸ @x402rs

—

► Wrap-Up

x402 revives the forgotten HTTP 402 code, creating a native payment layer for the internet.

It enables instant, account-free USDC payments between websites, APIs, and AI agents.

By combining open web standards with on-chain settlement, x402 removes payment friction and bridges the web with decentralized finance.

As AI and automation grow, x402 could become the foundation for permissionless, instant payments across the internet.

—

CC - @jessepollak | @brian_armstrong | @dankimxyz

— Disclaimer

https://twitter.com/18052866/status/1976367759018819602

More resources about x402 from @dankimxyz:

https://twitter.com/18052866/status/1976367759018819602

Read 4 tweets

Eli5DeFi

@eli5_defi

Sep 8

➥ The Bidding War for $USDH

The competition to deploy @HyperliquidX's upcoming native stablecoin is becoming increasingly intriguing.

Currently, three 3 have been submitted by established stablecoin issuers:

❶ @Paxos ⟶ Regulated, institutional bridging ready
❷ @fraxfinance ⟶ DeFi-native efficiency
❸ @withAUSD ⟶ Collaborative, scalable infrastructure

Let's also remember that @circle is planning to launch native $USDC on Hyperliquid (it's a bit too late imo).

Below, I will outline the main proposals and then compare them in a table for clarity. ↴

➠ Which one do you think have the best proposal for USDH?

— Disclaimer

Read 4 tweets

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

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