SPIN FINANCE : EXPERIENCE THE FUTURE OF OPTIONS TRADING WITH THE FIRST ORDER BOOK DEX ON NEAR
You no longer have to deal with custodianship to enjoy order book trading within DeFi! Thanks to Spin Finance, you can take full advantage of derivatives trading of digital assets on NEAR.
Spin Finance offers a super competitive CEX-like experience by bringing Order Books—one of the core components of Central Exchanges (CEX)—on-chain. Since launching its mainnet last year, the Spin team have been building and innovating to deliver a complete on-chain derivatives trading experience and are on the cusp of launching a third integral feature; an options contract. Currently in testnet, the DeFI Options Vault (DOV) will complete the trifecta of Spin’s core products (Spot, Futures, and Options).
In the following article, we zoom in on the unique advantage of Spin’s on-chain order book, the DOV release, and quickly run down the other two core features of the Spin ecosystem.
TL;DR
- Spin is the first order book DEX on NEAR. The mission of Spin is to decentralise derivatives trading. Its core products are Spot, Perpetuals Future, and Options trading.
- The platform offers a competitive CEX-like trading experience thanks to an on-chain order book that leverages NEAR’s infinite scalability for security, fast trading execution, and low transaction fees.
- The combination of an order book and a decentralized infrastructure means users get the refreshing experience of an order book and DEX without the custodianship and drawbacks of AMM models used by most other DEXs.
- The Options feature, known as DeFI Options Vault, is an automated NEAR Covered Call Strategy that automates the issuing of Options contracts for sellers and pays buyers using a cash settlement method.
- The Spin team just launched their airdrop 2.0 and is inviting active and new community members to become spinosaurs and earn a share of 750,000 allocated SPIN tokens. More on the exciting opportunity below.
The unique advantage of an on-chain order book
Most DEXs (Uniswap, Curve, PancakeSwap, SushiSwap, etc.) use an Automated Market Maker (AMM) model to execute trades. AMM models are based on liquidity pools and use a peer-to-pool and an algorithm to determine asset price. However, the downsides are the high slippage fees if a large order is executed when there is low liquidity or the even bigger threat of sandwich attacks by front-runner bots.
On the other hand, the Order Book trade model used mostly by CEX platforms and certain DEXs (such as dYdX and Serum) offers traders the ability to determine and choose their asset prices, size, and the direction of their trade. Traditionally, Order Book models operate primarily off-chain to maintain speed, making them easy to hack. Spin is taking it up a notch by using a Central Limit Order Book model supplied with limitless liquidity by a single asset staking pool.
This solves the following problems:
- Shortage of liquidity
- Impermanent loss
- Having to rely on arbitrageurs (as in the case of AMMs)
- High slippage fees
- Sandwich attacks
Spin’s Central Limit Order Book runs on-chain, maintaining its speed and cheaper fees thanks to the power of NEAR’s Sharded PoS blockchain. Running on-chain also makes Spin’s Order Book impervious to hacks. It is this innovative and robust combination that underlines Spin’s core value proposition.
Spin DeFI Options Vault (DOV)
An Options contract gives a trader the right (but no obligation) to buy (call) or sell (put) an asset at a specific price for as long as the contract is in effect. The specific price is known as a strike price.
DOV is an automated NEAR covered call strategy that allows an Options seller to create Options and sell them for a premium and for Options buyers to hedge and trade more efficiently by buying the Options. DOV uses a cash settlement method to payout buyers.
Options made easy with automation
Spin developed the DOV as an Automated Investment Product, and it’s the first of many to come:
- Instead of manually creating Options, sellers analyze and deposit their money into a Vault.
- Upon deposit, the seller is issued vtTokens equivalent to the amount deposited as proof of deposit.
- These Vaults issue NEAR covered calls as Options with strike prices that last an epoch. The number of Options is always equal to the amount of deposited assets. For example, If 1,000 $NEAR is deposited into a Vault, the number of Options will be 1,000.
- Each epoch lasts for seven days. During an epoch, the Options are auctioned to buyers.
- At the end of an epoch, the Options are ceded to the highest bidders (buyers) who pay a Premium for them. The Options expire at the end of an epoch.
- The DOV uses a cash settlement method to payout the buyer. The method takes the difference between the strike price and expiration price multiplied by the number of options; Payout to buyer = (EP-SP) x n (Strike Price = SP, Expiration Price = EP, Number of Options = n)
As a seller, Options trading has the potential to be rewarding because of the Premiums received upfront from the buyers during the auction. The DOV Vault is designed to determine strike prices that have a low risk of being reached during the epoch, and it becomes increasingly accurate as more money is deposited into the Vault. For buyers, profitability lies in taking a calculated risk on the increase in price in return for exponentially high rewards that easily cover any amount spent as a Premium.
Spot trading
Spot trading is very similar to what users execute on CEXs. With your wallet connected, you select a trading pair, choose between a limit or market order, and place the order (buy). Once settled, the transaction will be reflected in your Spin wallet balance.
Spin Finance currently supports seven wallets, including Near, Sender, Meteor, Here, MyNearWallet, Nightly, and Opto, and ten trading pairs.
Running an order book on-chain means that users can enjoy some of the lowest trading fees you’ll find on a DEX (up to 3x lower than AMM models), coupled with faster trade execution and transaction speeds.
Perpetuals trading
Perpetuals (commonly known as Perps) is a Futures trading solution that allows you to cash in on movements in the price of an asset. You can earn and extract the yield from both an increase and decrease in asset price, depending on the position you created with the contract.
Trading perpetuals on Spin requires you to have collateral (USDC) in your Spin wallet and it is necessary to acquaint yourself with how it works because you can easily lose all your funds if you don’t have a solid handle on what you are doing.
Perps trading follows these steps:
- Connect your wallet with collateral (USDC) to Spin
- Deposit your funds into a margin account
- Choose the order type (limit/Post-Only or market/FOK), the position size, and create a position (long or short)
- Positions can be leveraged up to 10x
- This creates a margin ratio that is locked to your account
- When your position is closed or changed, your locked funds are settled the resulting PnL is added to your account in the event of a profit or deducted if it was a loss
Important: Perpetuals trading multiplies profits or losses when you leverage your position, and you could lose all of your funds if you do not have not collateral to cover your loss
Insightful Analytics
Spin recently added an analytics feature that degens will definitely love. The Spin Analytics dashboard allows you to have an overview of lifetime trading volume and fees on Spin and also takes an in-depth look at the metrics for both the Spot and Perp contracts.
Looking ahead
The Spin roadmap suggests that there are still plenty of features and integrations to come as the team continues to build on the foundation of its core products. Expect powerful extensions like multi-collateral contracts that will allow traders to use assets other than USDC as margin and Cash Secured Put DOV. For now, you can participate in the SPIN token airdrop and earn SPIN tokens before the official sale event. All you have to do is be an active user of the Spin platform.
More on the airdrop: become a Spinosaur!
The first phase of the Spin airdrop already passed, but this is your chance to catch up! Spinosaurs are actively engaged members of the Spin community who onboard new users, trade on Spin, and shill everything Spin-related. The airdrop will allocate 750,000 SPIN to 600 Spinosaurs, and community members will have 24 hours to claim their exclusive spinosaur rights before the airdrop opens to all members of the community.
To become a spinosaur, all you have to do is react to the airdrop post on Discord. As a participant in the airdrop, you will have to complete challenges on Crew3 to earn $SPIN.
To conclude, Spin Finance leverages the power of two worlds: the decentralised infrastructure of blockchain technology and the Order Book trading model, to offer a comprehensive derivatives trading experience with less risk, more efficiency, and a user-friendliness interface for both seasoned and new traders. We’re excited to see the future of Spin!
Spin Finance: Website | DOV testnet | Discord | Twitter
Written by Beet
Edited by @achildhoodhero
About NEAR Protocol
NEAR is on a mission to onboard a billion users to the infinite possibilities of Web3 with the Blockchain Operating System (BOS). Leveraging its high-performance, carbon-neutral protocol, which is fast, secure, and scalable, BOS provides a common layer for browsing and discovering the Open Web.
NEAR Protocol | NEAR Discovery
About NEARWEEK
NEARWEEK is one of the first decentralised news sources within the NEAR ecosystem. Via the production of high-quality content, news, and promotional support, NEARWEEK unleashes the full potential of its media outlets to act as the social epicentre of the NEAR ecosystem.
Website | Twitter | Newsletter
