How Friktion’s Volt unlock Yields for Defi Hedge funds
As we round up the final tests for the upcoming Friktion integration we wanted to give an overview of how defi option vaults generate returns and help fund managers to diversify their portfolios.
Firstly, What are defi option vaults?
Dubbed as DOVs are vaults in which investors/traders can simply stake their assets which deploy assets into options strategies. The strategies deployed provide the highest base yield in defi averaging 15–50% and the yields are auto compounded every epoch.
The strategies used by these vaults are covered calls and cash-covered put strategies more coming soon.
Let’s try to cover the basics of these strategies below:
What are covered calls?
A covered call is a strategy which involves holding the underlying asset and writing a call option on the same underlying to collect a premium over the call without the strike being hit, by selling covered call options, the profit comes from an increase in the price of the underlying index above the exercise price, but they bear the risk of a decline in the index price or the call option expiring in the money.
What are cash-secured puts?
Cash secured put is where you put up a quoted asset against an underlying asset. Selling a secured put is anticipating an asset’s market value will stage above a certain price and collecting premium from buyers.
Friktion Volts ⚡️ on Investin
For the first time fund managers would be able to access state of the art defi option vaults through this integration, opening a new realm for on-chain asset management.
This vaults allow traders to express their outlook on markets eloquently and generate great returns for their investors, be it sideways, bear or bull markets there is a vault to express it!
To access these juicy yields all Investin fund managers need to do would be to deposit into the choice of there Volt through the new tab “Friktion” on trading terminal and wait for the epoch to start. And like always we allow all investments to be non-custodial i.e. investors can withdraw anytime as they like and the protocol will give back friktion share tokens (Fc tokens) according to investors share which they can use to claim the underlying collateral using Friktion UI.
Composability has been always at the core of Investin and we cant wait to bring all of Solana defi into one place!