Thread by @OuroborosCap8

1/N: @ribbonfinance's blockchain settled options platform Aevo is launching within the next few weeks. We are big options traders and were able to test out the product which post led us to also buy $RBN tokens. A thread on Aevo and our investment thesis.

2/N: Most options volume today are on Deribit. Settling on a CEX like Deribit means you are entrusting Deribit to ensure adequate system margin such that all winners' and losers' P&L net off. And there are no unaccountable holes in the system.

3/N: The issue with that as we know post FTX and 3AC's hole in Deribit is you can't fully trust anyone. A CEX can sometimes be mismanaged (eg. FTX) and certain participants can get unlimited margin thereby creating massive holes in the system's P&L. Trustless is often better.

4/N: This is what Aevo is attempting to solve for. Allowing options contracts to be settled on a blockchain. Your collateral, P&L and contracts will be on the blockchain and as such it will be trustless and participants can be comfortable around credit risk.

5/N: Blockchain settled options contract is not a new idea but what I believe sets Aevo apart is the passive flow that RBN provides from its DOV. Anyone can spin up a blockchain to settle options on but getting liquidity onto the platform is the challenge.

6/N: @ribbonfinance currently does ~$40-50mn notional per week of ETH options sell flow through its DOV. Yes its small compared to Deribit's volume (~1.5-2%) but highly respectable if you compare it to the volumes of options CEX below Deribit.

7/N: Bybit and Binance are ~4-5% of Deribit's volume. And bearing in mind that RBN's DOV is not a CLOB exchange and only does weekly ETH sell flow. Now imagine when that combines with Aevo's CLOB feature.

8/N: Another feature we were pleased with as well is settlement of options in USDC - which seems like an obvious must-have but still one of the biggest inconveniences to any option trader on Deribit. Options on Deribit are settled in native crypto, ie. BTC options in BTC.

9/N: UI/UX was also smooth in the beta. Very clean and easy to use.

10/N: Now onto the investment thesis. RBN's current mkt cap is $100mn. Raised $16.5mn so far and has $10mn in revenue since inception. If I'm not wrong they have still have >$10mn from the 2 above. That means a long runway to keep building. And a net cash mkt cap of $90mn.

11/N: Emissions have also recently been cut to 125K RBN/week (~$1.3mn per year vs $100mn mkt cap). Not inflationary.

12/N: Paradigm got in at 25c in the recent round, so you get to buy it cheaper here.

13/N: I expect Aevo when switched on to be super fee accretive. Here's some math. Aevo predominantly charges 4 types of fee - i) Maker Trading Fee, ii) Taker Trading Fee, iii) Liquidation Fee and iv) Settlement Fee.
docs.aevo.xyz/docs/standard-…

14/N: Just based on the $40mn of weekly passive DOV ETH option sell flow, we can already expect $1.6mn of fees annualized.

15/N: This has yet to include volumes from 1) the expected increased trading active on a CLOB feature comes on, 2) BTC options, 3) a potential altcoin options product that I've heard they will introduce down the line. Also did I mention block trading via
@tradeparadigm.

16/N: In summary,
- Aevo great product w good PMF
- token not inflationary
- significant fee accretion
- token cheaper than recent round
- team's cash balance gives it a huge runway