How to take part in the ETH L2 ®evolution with MATICX&Options.
The main idea is to participate in the long-term development of the Ethereum ecosystem. The current development vector suggests a conscious choice in favour of an L2 solution as a more efficient and convenient way to scale the operation of the underlying blockchain.
The catalyst for future price growth is the Merge stage — a change in the consensus of the underlying ETH network from Proof-of-Work to Proof-of-Stake. Leaving the technical side of these processes out of the scope of this idea, let’s focus on the financial side. As a result, the reward for the new blocks will be received by validators who stack ETH tokens to secure the network. You can find out more about the specifics of how validators work on the official Ethereum website.
In order to make the liquidity provided by investors as part of the PoS operation more efficient, a number of protocols offer to issue special “liquidity tokens” secured by tokens placed with validators. Such activity, in addition to issuing tokens, also requires the creation of some secondary infrastructure — exchange pools on decentralised exchanges or yield aggregators — where the generated liquidity can be directed. The biggest players in this segment are Lido and Stader Labs.
At the moment, ETH tokens stacked in Beacon Chain cannot be withdrawn — the algorithm will be implemented after a change of consensus and will take a long time (from a month to six months). However, it is possible to take advantage of yields from liquid stacking without time constraints on the L2 solution — Polygon. On this sidechain, PoS validation has been implemented quite a long time ago, and now there is a liquidity provision incentive program that allows you to get up to 9% of MATIC tokens leveraged from validators. The accrual occurs when the stacked version of MATICX is exchanged back for the original MATIC.
The procedure differs from the classic “Buy and Hold” and involves trading options using the Covered Call strategy — those selling call options on the appropriate amount of tokens available (without the use of leverage).
So, to summarise the information above:
- The idea is linked to the expectation for Ethereum growth and the ecosystem’s highly correlated token, MATIC.
- The instruments used are liquidity tokens and options.
- The procedure is as follows: buy MATIC token, then use Stader labs liquid stacking feature and get MATICX, sell a covered option on MATICX on deltatheta (or through takeout of already open trades (1) through independent limit order creation (2) An example template is available here. A video on how to use the deltatheta platform is available here.
Objectives: until 30 September (tentative start date of Merge) +15% of option trading strategy covered call + option premium (tentative 0.8% per week) +9%*(55/365) of MATIC stacking = 15%+5.6%+1.35%=21.95% for 55 days, which is approximately 145% p.a.
Risks: this is a directional trade idea, so in case of a fall in price there is a risk that the value of the underlying asset MATICX in stablecoins will decrease, but with adjustment for the yield from the rollover of the position of sold options and the liquid stacking.