Jan 13, 2021
BIOPset 101
BIOPset lets speculators and liquidity providers profit from buying and selling binary options via its smart contracts on the Ethereum Network. It’s the first on-chain trading protocol dedicated to binary options.
With decentralized options platforms springing up faster than flowers in the spring, the average degenerate financier (or degen) may miss the distinction. The benefits will be particularly elusive to those degens new to decentralized options trading.
Hear ye, hear ye… This article should clear things up a bit! It contains the responses to product questions posed to Shalaquiana, the developer of the platform, and a brief description of binary options.
The key to understanding the difference between BIOPset and other decentralized options platforms is to first understand that BIOPset enables the buying and selling of binary options.
Binary options are financial derivatives. They are called derivatives because they derive their value from something else. That something else is called the underlying (or underlying asset).
Binary options expire. When they expire the option either has value or not. The value of the option is binary. Hence the moniker binary option.
The Essence Of Speculation Via BIOPset
In BIOPset, the underlying asset is ether (or ETH). The protocol allows speculators to prognosticate on the price of ETH. BIOPset options expire every hour.
When BIOPset options expire, the binary options are either in-the-money (and worth something) or out-of-the-money (and worthless). In yield terms, in-the-money (or ITM) options yield 95%, and out-of-the-money (or OTM) options yield -100%.
In BIOPset, ITM options are taxed 5%. That 5% is a reward paid to those that exercise ITM binary options.
Shalaquiana responded as follows to questions on BIOPset:
What’s So Special About BIOPset?
What can speculators and liquidity providers do on BIOPset that they could not do before?
Betters gain access to the first accountable non KYC binary options platform. There are centralized platforms without KYC but they have no accountability and are risky. Using them means depositing first and then betting. You don’t know if you will be able to withdraw your money if you win or decide to cut your losses.
BIOPset is the first binary options platform to offer instant access and no holds on betters funds. As soon as your option is ITM you(or someone else who receives a small fee for their work) can exercise it and you get ETH right in your wallet.
Instant payouts. I haven’t found that available anywhere.
Liquidity providers (“LPs”) get to be a part of the action. Up until now, you had to be connected with a centralized platform as an investor/owner to act as a house in binary options gaming.
BIOPset enables LPs to back the house and make its rules. By being an LP users earn BIOP tokens. Those tokens will allow direct control over the protocol through governance contracts.
Who Are Centralized Competitors?
Is there a centralized platform that allows a similar type of binary options trading?
Yes, there are endless lists of such platforms. All of which require KYC, or have account minimums, or have withdrawal holds. Three examples are https://www.binarycent.com/, https://iqoption.com/, and https://www.binary.com.
Here’s a list of 20 more: https://evokefinance.com/best-binary-options-brokers/
What’s In It For Those Not Interested In Speculating?
How do fees work? What’s in it for liquidity providers?
There are multiple “fees” involved in BIOPset. Here’s a brief rundown of each:
- Bet Fee: A variable fee is charged on each bet. This amount is transferred to the developer fund. When ownership of the protocol is transferred to the governance contracts they will become the new recipients of it. That value will be available to BIOP holders who have staked BIOP into governance.
- Exercise/Expire Fee: This fee is paid out of the winning/losses of a bet. It is paid to the user who executes the transaction to unlock the funds from that bet.
- Early Withdraw Fee: This fee is paid by liquidity providers who wish to withdraw their funds before their next withdrawal is available (24 hours, after the initial launch period).
As you can see there is no direct fee for the liquidity providers initially. That’s not how binary options works. The fee they earn is from betters losing bets.Option time length and available pairs are the levers LPs can use to entice betters to play, while keeping the odds stacked in the pools favor. This is why control of governance (available to all early adopters through the reward mechanism) is important.
What’s BIOPset’s Market Positioning?
Who’s willing to pay those fees? For example, if you want a call option on ETH at any strike price but don’t want the hassle of KYC, paying HEGIC’s 1% fee is acceptable.
Again as we can see from the list of all the binary options services operating around the world lots of people want to play. Regulations on binary options makes it hard for some.
BIOPset has no minimum, maximums only capped at the pool balance, no KYC, and competitive return rates (89.8% at the time of writing as compared with 83–95% of the 20 other services listed above).
BIOPset is also safer for betters than traditional solutions. Fraudulent platforms are a rampant problem in binary options trading. https://binarytradingclub.com/binary-option-scams/.
Across every category I used when searching for a binary options trading platform for personal use BIOP offers the best terms for betters.
— No withdrawal rate.
— Withdrawal guaranteed on-chain
— Instant access with no need to sign up
— No “credits”. You can bet straight from your Ethereum wallet and receive funds at option closing.
What Are Product Risks?
Is the code audited? Will it be?
The code is not currently audited, DYOR.
I am in favor of audits and think the people doing them are much smarter than me. That being said, I don’t know how to pick a good auditor from a bad one, and let’s be honest, the real audits are those conducted by all of the sharp developers and automated programs probing every contract on mainnet for a juicy bug to exploit with flash loans and opcode tricks.
Frankly, I don’t have money to spend on an audit without some sort of guarantee the auditors would take the liability in paying for critical bugs they may overlook.
The interview doesn’t end here. Hear what Shalaquiana has to say about BIOPset’s tokens next. Or skip ahead to the final part of the interview here.
