Jan 14, 2021
What’s Up With That BIOP Token?
BIOP is BIOPset’s governance token that pays dividends. BIOPset’s smart contracts let traders profit from speculating on the price of ether with binary options. It’s the first trading protocol on the Ethereum Network to cater to this type of price speculation.
If BIOPset were a casino, the BIOP token would function like shares of common stock in the casino. (Arguably) BIOPset isn’t a casino, but its BIOP token gives owners the ability to vote on what games are played and how. More importantly, tokenholders benefit from decisions that make the platform flourish. To be more precise, decisions that improve profitability for liquidity providers (aka “house”).
Let’s dig a little deeper into BIOPset tokens and clearly understand why they were minted. This article contains the responses to five token questions posed to Shalaquiana, the developer of the BIOPset platform.
BIOPset allows anyone to take a position on the price of ether (or ETH) in an hour into the future (when the option expires). The price may go up. It could also go down. The protocol doesn’t care how much of an increase or decrease there is. It focuses solely on the direction of the price after the option is purchased. [1]
Options buyers (or holders) need to determine which direction they anticipate the price moving. If they forecast a price increase, they would buy (and therefore hold) the call option. If they figure that the price should decrease, they would buy/hold the put option.
House is the counterparty to these options. Consequently, Shalaquiana powers the trading protocol with two tokens to ensure a good experience for all platform participants. She explains their function below:
Introducing BIOP and pETH
Why Do You Need Tokens?
Ethereum is a token-based ecosystem. I have worked on other ETH projects in the past and found that everyone’s first question in tokenless projects is: where’s the token?
The various records the tokens represent could be replaced by simple lists of addresses and amounts but tokens make it easier for other people to build other things using this protocol.
If you’re working on an Ethereum protocol and it doesn’t involve any tokens (other than the gas to run it), then why are you using Ethereum? Building without a token is like cutting against the grain. It’s harder and why do it. I want to do binary options, not optimize data storage.
There are two tokens involved with BIOPset and they serve very different roles.First is the token received by liquidity providers (“LPs”) who deposit ETH into the pool. They receive pETH (pool ETH). This token is an IOU representing a percentage of the total ETH held in the pool. It does not represent an exact amount because the total balance fluctuates with every bet won or lost. I have no intention to ensure liquidity for this token on any exchange as it is not intended to be traded. Providing exchange liquidity for this token primarily would benefit arbitragers working in the space between the exchange price and the amount in ETH you could receive by swapping your tokens with the pool interface directly. At its base pETH is an IOU. It has no value outside of its relation to ETH in the pool.
The majority of the second token, BIOP, will be distributed to early adopters and heavy users of BIOPset. When you deposit ETH in the pool, place a bet, or exercise/expire an option you will earn a portion of BIOP available. This is a governance token, it will be useable for staking into the governance contracts to vote on changes to the Binary Options protocol. A portion of BIOP will be available along a bonding curve to later adopters who want to help guide BIOPset’s future once the initial rewards run dry. The bonding curve will swap BIOP/ETH and received ETH will be staked into the BIOPset pool. Fees that staked ETH generates will be distributed to the staked BIOP holders.
Stocks And Bonds
How is the pool token different from the governance token?
The pool token (pETH) is an IOU representing ETH deposited in the pool. It is not intended to be exchanged and the outstanding amount will never exceed the amount of ETH which has been deposited (there may be more or less ETH available based on the results of bets against the pool).
The governance token (BIOP), which will be majority distributed as a reward to adopters is voting rights for the future of BIOPset. Holders will be able to vote on fees, trading pairs, the duration of options, and the return on investment (“ROI”) of options. Additionally, those with staked BIOP will be eligible to claim a portion of rewards generated by ETH locked in the pool from the later sale of BIOP via the bonding curve.
BIOP Staking
Are you planning to do staking on the governance token?
Yes, this is the fundamental purpose of it. Staking will not be available at the token’s release as the governance contracts still have to be written, but they will allow the staking of the BIOP governance token. Staking will enable users to control the levers (fees, times, etc.) controlling the binary options.
Yield Farming
Is there going to be yield farming on the pool token?
The quantity of pool tokens(pETH) you possess indicates the relative percentage of earnings (or yield) available from the staking ETH into the protocol. Outside of this, additional yield farming is not on my list of things todo. I welcome other developers to add this if they want it. see
Token Swapping And Liquidity
How will you ensure liquidity for your tokens on Uniswap?
I will not. Both tokens have swapping mechanisms available. Providing liquidity on decentralized exchanges would only serve to line the pockets of arbitragers. While I respect what they do, funding them is not my goal.
The interview doesn’t end here. Hear what Shalaquiana has to say about the motivation for creating BIOPset and her vision of the future next.
In case you missed it, the first part of the interview is here. The final part is here.
[1] BIOPset treats no change in price exactly the same as a decrease in price.
