In Neuron, we make smart on-chain options and structured products.
Blockchain is a transparent and trustless substrate to build efficient financial services.
Derivatives trading is still in its infancy in blockchain. Neuron provides a native solution for trading options in crypto.
Along with financial experts, we expect the option market to mature in the future years, which will enable participants to take more nuanced hedging or speculative positions and create structured products. Total value locked in blockchain option apps has heavily grown in the last six months. Yet option volumes are only 1/10th of spot in crypto, while in traditional finance derivatives-to-spot ratio is close to 10 to 1, so one can expect a 100X increase in trading volumes.
Neuron leverages atomic transactions in web3 to make options more profitable.
Blockchain provides easy means to compose yield flows with web3-native atomic transactions, achieving an enhanced return.
Till the time of expiry, a user can earn a yield on the collateral in a covered option. USD that secures put option can be locked in Curve contract to collect exchange fees. ETH tokens that collateralize ETH covered call position can be sent to a lending protocol. Yet no option protocol fully unveiled the potential of an option contract that can be simultaneously collateralized with assets that were put to work in essentially any yield source depending on every option writer’s will. We bring that capital efficiency to options and structured products, automatic option-trading strategies available for easy deposits.
We’ve built Neuron Option tokens with web3 in mind: an asset simultaneously collateralizes an option and is sent to the liquidity market of choice:
Range of stablecoin liquidity pools based on decentralized exchanges
Short position owners can also set the collateral to earn a return in a lending protocol such as Aave or Compound for the time till option expiry.
Neuron Option Pools.
Option Pools monetise the high volatility of the underlying asset and are one-click easy to use. Neuron adds liquidity/lending APY to the running option strategy, making option vault more profitable.
Neuron Option Pools allow users to gain passive yield with option strategies (5–20% APY in vanilla strategies such as covered call and cash-secured put selling) while earning an additional return in Curve for liquidity providing (3–20% APY). The final yield is summarized.
For options market pools generate option liquidity for traders who’d like to buy call and put options.
Neuron Pools generate option liquidity (put and call options) for tokens. In Neuron, any DAO-approved project can incentivize deposits in the Option Pool on its token to improve the outflow of puts or calls.
Uniswap DAO can decide to add UNI rewards for deposits in the UNI Covered Call pool on Neuron. UNI tokens will be distributed as rewards to depositors proportional to their share and time in that option pool. Option pool sells call options every round, so Uniswap will increase liquidity for call options on its token.
DeFi Option strategies are effectively democratizing the element of the crypto space that financial institutions have been eyeing with envy, which is the implied volatility (IV). DeFi has 10–20 times the IV of Tradfi instruments. Institutional players have been scrambling to offer this to Tradfi investors, structuring products on crypto assets with risk-adjusted returns that far outstrip anything currently available. Defi Option Vaults are making this alpha accessible to every individual.