2/ To successfully achieve its strategy, DODO is integrating with layer-one chains (independent blockchains like Ethereum and Polkadot), layer-two chains (scaling solutions like Arbitrum that are secured by the L1s they support), and sidechains.
3/ For DODO, the name of the game is to bring its PMM’s advantages to as many people as possible by deploying its liquidity to a range of viable DeFi-centric chains.
To name a few, DODO is ready on Arbitrum's rollup L2 and continues to work with Polygon and Polkadot's Moonbeam.
Imagine a liquidity pool like a magic Hot Pot with 2 flavors of soup: $ETH and $LINK.
This magical Hot Pot can convert LINK soup to ETH and vice versa.
As long as the conversion rate (price) is fair, the pot maintains its tasty ratio.
2/ Some traders will take a bowl of $LINK soup so now you have more $ETH soup.
And then, a few more traders come and take some ETH soup so now you have more LINK.
Each time, they give a little back to the pot for these conversions (similar to trading fees)...
3/ There may be more or less of one flavor shifting the pot or pool ratio in what's known as Cyclical Imbalance but the pot should stay tasty as long as conversions happen at a fair rate between the two soups.
So what happens when the soup conversion rate or price isn't right?
Theta or time decay refers to the reduction in value of an option as the time to the expiration date nears.
SIREN AMM v2 mitigates theta decay loss using a Black-Scholes model for pricing.
2/ Two factors determine the price of each trade: spot price and slippage.
The spot price is determined using a Black-Scholes model, taking into account parameters like underlying price, time to expiration, option strike and implied volatility, coupled with a Chainlink oracle.
3/ Similar to other AMMs, trades will be impacted by slippage based on the size of the trade and available assets in the pool.
In other words, the larger the trade relative to the size of the pool, the higher the slippage. This slippage benefits liquidity providers of the pool.
Options traders have come to rely on tools in traditional finance that were refined over decades.
And with options being fairly new to DeFi, SIREN aims to fill a niche by building a platform suited for sophisticated options traders.
2/ To make full use of SIREN’s design which allows traders to easily swap options in and out in order to build complex positions, options traders need the necessary information to properly assess those positions.
This is why SIREN's UI displays the greeks for each option.
3/ Option "Greeks," named after the Greek letters that denote them, measure risks associated with a position.
2/ This nautical-themed on-chain options marketplace launched its alpha release in December 2020 and is about to embark on the next chapter of its journey with SIREN Markets launching on mainnet today.
3/ SIREN protocol tokenizes both the long and short sides of an options contract as ERC20 tokens which enables options to be traded via its AMM.
In other words, SIREN doesn't require a third-party settling mechanism or order matching to complete option settlement on-chain.