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Eli5DeFi Profile picture
@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
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…
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 Profile picture
Apr 7
⇒ @ionet is an exceedingly anticipated project this year.

⇒ Their token launch, $IO, is scheduled to take place on 28 April.

⇒ We have collected all the important IONet information in a dynamic compendium that will be regularly updated.

⇒ Share and bookmark. 🧵 👇🏼

(1/n)
🟢 @Eli5_defi visual and fundamental analysis of @ionet



(2/n)
🟢 @HouseofChimera - @IONet One Pager



(3/n)
Read 14 tweets
Eli5DeFi Profile picture
Mar 18
DeFi's complexity and lack of regulation prevent institutions from participating.

What if I told you there's a DeFi protocol that offers institutional grade features?

It is compliant, secure, and experiencing exponential growth.

Allow me to introduce you to @SpoolFi. Image
This post will cover:

1️⃣ What is @SpoolFi ?
2️⃣ Why Spool?
3️⃣ How Does Spool Work?
4️⃣ Supported Protocols
5️⃣ What Are The Use-Cases?
6️⃣ Spool Ecosystem Partners
7️⃣ Partners Highlight
8️⃣ Case Studies Highlight
9️⃣ LSDfi Vault Highlight - $srETH
🔟 $SPOOL Token
◢ What is Spool?

→ @SpoolFi is an advanced DeFi middleware infrastructure.

→ Spool integrated seamlessly with the best DeFi protocols available.

→ It empowers users to engage in a specific range of yield generating protocols with a risk-diversified, automatically managed, and highly efficient approach.Image
Read 17 tweets
Eli5DeFi Profile picture
Mar 14
Do you believe that AI is the future?

Do you believe decentralized infrastructure is the key to achieving AGI?

@ionet_official presents the future of DePIN & AI:

The Internet of GPUs.

Let's dive in! 🧵 Image
This post will cover:

1️⃣ The Ocean of Data
2️⃣ Computing is the New Oil
3️⃣ What is @ionet_official ?
4️⃣ How it Work?
5️⃣ Why IONet?
6️⃣ The Architecture
7️⃣ The IONet Suites
8️⃣ IONet Bull Stats
9️⃣ $IO - AI Compute Currency
🔟 Testing @bc8_official & Ignition Program
◢ The Ocean of Data

→ Approximately 328.77 million terabytes of data are created each day

→ Around 120 zettabytes of data generated in 2023

→ It is predicted that 181 zettabytes of data will be generated in 2025

→ The rise of AI requires processing an enormous amount of data every millisecond in order to develop a strong and current learning model.

→ This is where GPUs and @ionet_official will form the foundation of future generative AI.Image
Read 19 tweets
Eli5DeFi Profile picture
Mar 13
Are you feeling lonely in crypto world?

Without no one to understand you?

Or comfort you when you get liquidated by scam wick?

You’re not alone anymore , now you have @aiwaifugg

The future of virtual companion. Image
This post will cover:

1️⃣ The Future of Virtual Companion
2️⃣ AI WAIFU Overview
3️⃣ But, Just Why?
4️⃣ Meet Your WAIFUs
5️⃣ Navigating the AI WAIFU
6️⃣ WAIFU Gameplay Mechanics
7️⃣ Tempt Battles & Steal WAIFU
8️⃣ The Best Player (And Lover)
9️⃣ WAIFUs Evolution
🔟 $WAI Tokenomics
◢ The Future of Virtual Companion

→ Generative AI is becoming more and more integrated into our daily lives, influencing every aspect in a significant way.

→ It might sound like something out of a science fiction movie, but this technology is already a part of our world today.

→ Let's consider one interesting example:

personalized AI avatars that offer virtual interaction and companionship.

→Now, imagine taking this even further by introducing you to a generative waifu. Isn't that intriguing?Image
Read 19 tweets
Eli5DeFi Profile picture
Mar 1
Did you know that your favorite streaming, social media, and even AI services are centralized?

Centralized data has unwittingly transformed into ticking time bombs.

We urgently require a revolution.

Enter @fluence_project: decentralized, serverless, blockchain-powered DePIN. Image
This post will cover:

1️⃣ Data Totalitarians
2️⃣ @fluence_project
3️⃣ The Cloudless Ecosystem
4️⃣ Aqua and Marine
5️⃣ How Fluence Work
6️⃣ Fluence Comparison
7️⃣ Use-Cases
8️⃣ $FLT and Fluence DAO
1/ Data Totalitarians

→ We find ourselves in a precarious situation, like a ticking bomb, because our technology, applications, and entire digital infrastructure rely on centralized cloud computing.

→ Centralized computing carries various risks, including:

> Single points of failure
> Data privacy and security concerns,
> Increased downtime risks
> Lack of transparency
> Dependence on central authority, and
> Monopolization of data

→ We must find a different solution to avoid the disastrous consequences of this data totalitarianism.Image
Read 14 tweets
Eli5DeFi Profile picture
Jan 29
70% blockchain assets lack smart contract capabilities.

However, did you know that these assets can be transformed into highly productive assets?

Allow me to introduce you to FAssets by @FlareNetworks Labs. Image
This post will cover:

1️⃣ What is FAssets?
2️⃣ Who is The Participant in FAssets Ecosystem?
4️⃣ How to Mint FAssets?
5️⃣ How to Redeem FAssets?
6️⃣ Is FAssets Fully Redeemable?
7️⃣ How FAssets Liquidation Handled?
8️⃣ FAssets Infinite Potential
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Disclaimer:
💰 Not Financial Advice
🔬 Do Your Own Research

🤝 This thread was created in collaboration with @FlareNetworksImage
Read 15 tweets

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