Where is Carmine Options AMM going in the short term
On chain options and especially Carmine Options and Carmine Options AMM has to possibility to change the world. We are working on revolutionary improvements to DeFi across EVM chains in terms of risk and below is small sneak peak into what we are up to.
Trading venue
At the core of everything is the Carmine Options AMM that is a trading venue for users to buy and sell options. Even though it looks like it, it’s not just that, Carmine Options will become the bedrock on top of which new and inovative products will be build on.
Hedging Portfolios
Simple and known for decades… Users can hedge themselves and in some cases insure the value of their investments.
Imagine you have a portfolio of altcoins, they are most likely correlated with ETH and BTC, so hedge with these and buy PUT options. In few months we expect to be adding other tokens.
Do you want to invest in ETH but are afraid to loose significant part of your wealth? Buy put option on ETH/USDC, it’s basically insurance on value of ETH. For example buying PUT option on ETH/USDC at 1200 and 6 months maturity means that if the price of ETH is below 1200 in 6 months you will get the price difference
EVM wide
Initially we will allow easy to stake capital from any EVM chain and we will be improving the quality of this to make it instantaneous and we will add possibility to trade options from any EVM chain. Another important part is that we will allow bridging option tokens which will allow all of the features described here to be available on all EVM chains. The first part of staking will come relatively soon, the rest will take a little.
Hedging and insuring impermanent loss
Impermanent loss is the threat to all of the staked capital in AMMs. We know how to deal with it and we released first article (of several) here. Keep following us to not only hedge against it, but also to learn about it.
Decreasing probability of margin calls
With options we can build tools that decrease probability of margin call. This sometimes requires custom builds but the idea is simple. “Smooth” out short term spikes in price with options, so that the trader is not liquidated because of a short term spike.
Leverage
We have two ways how to bring leverage to the users. First and a simple way is to use “compounding effect of options”. In our case it means that the simple leverage will be implemented with Bull Call Spread and Bear Put Spread. Implementing these results in the same thing as standard leverage for a single option, but its not usable to use across maturities and instruments. Full scale leverage will come later and we are discussing implementation with few lending protocols, since we want to deliver the best product and we believe that partnering on this is the right way to go.
Insurance
This is a little secret :) that we are working on ;)
