AMA with Moonshothunters — April 14th, 2021
Host Questions
To start of this AMA let's give the audience a brief description of what OPTIONS.MARKET is ?
Paul: All good. Options.Market began life as a fork of a VC-backed anon-project called SirenMarkets.com, which is an open source mainnet, decentralized options trading solution for ERC20 tokens. It’s what I beleieve is the most exciting space in DeFi at the moment and is set to take the industry to a whole new level.
However, I have given a tremendous amount of thought to all of the derivatives projects in the market and come to the conclusion that they are almost trying to be too clever. I’m a first-principles person. My career as an ex-banker taught me a thing or 3…
We will be offering up to $25,000 in awards and grants during the Gitcoin Hackathon that DEgen.VC is sponsoring, running from April 26 — May 17, to relook at the entire market and start from first principles.
We’re looking forward to creating a brand new use case for the OSM token beyond governance. Massively exciting.
KAELIN: Great Well Detailed Explanation. Speaking Of Degen.VC
Who is the team behind OPTIONS.MARKET ? and what is their experience ?
Paul: I am an ex-bank Treasurer with 20 years of Banking experience most of which spent in the derivatives an options markets.
This includes all asset types so crypto is another opportunity to bring my derivative skills to a new type of asset.
Co-founded $DGVC with Fraser in August of last year. Since then we have launched seven projects and a number of others in the pipeline.
$OSM is most exciting for me as I get to leverage my banking experience and 18 years of derivatives expertise — and in crypto! Life goal achieved!
Here’s what our ecosystem looks like:
We have built this ecosystem to fulfil a vast array of alternatives in DeFi — broadly catagorised in this Medium article:https://medium.com/degen-vc/degenvc-in-march-2021-e3cdcfe199b4
Fraser: As Paul said, he and I have been working on the perfect crowdsale solution since 2018. We focused a lot on curation during the dark years (2018–2019). This was with a view to solving the problems of the ICO. We were integrating smart contracts with Uniswap about a year before anyone had really heard of it. Some of you might know dontbuymeme.com. We launched Degen.VC right after seeing their launch and did not look back.
Options.Market is the latest project we launched. My background is Engineer, MBA, Olympian. I worked as an innovative finance consultant for five years before going down the blockchain rabbit hole in 2016
I’ve been managing Ethereum developers full time since 2016
KAELIN: Lol , It REALLY Is A Rabbit Hole 😅 Great Intro From The Both Of You 👏 Lots Of Experience All Around. How exactly does the protocol layer work ?
Fraser: Ok. Let me answer in 5 points:
1. About Protocol layers: Firstly, we believe protocols for the decentralized finance world do not need to be owned and controlled by venture capitalists. Protocol tokens, that will power DAO voting on key protocol direction and parameters, can and should be as widely distributed as possible from the outset. A buoyant DeFi market enables this and Degen VC launched Options.Market as a fork of SirenMarkets.com distributing OSM tokens widely and freely and leveraging Uniswap to discover a fair price for the protocol token in its nascent form.
2. Core vision for Options.Market: Options.Market is now being designed in such a way to render pricing oracles and other interfaces obsolete. The issue with the use of such tools is that they are provided by 3rd parties, and as a result a project is bound by the rules of these 3rd parties as and when they change. This does not make a project failsafe. Our approach is to use fully-underwritten and collateralization for writing options. This means that each trade is collateralized by liquidity pools provided by token holders — and for which tese holders are handsomely rewarded with 32.5% of total token supply.
3. Brining AMM innovation to options: A single MarketsRegistry contract establishes and manages individual markets. Once a Market contract is created anyone can interact with it in a permissionless manner. The collateral provided and locked in the smart contract ensures position solvency.
Options.Market tokenizes both the buyer (long) and writer (short) side of the options contract. The long position (lToken) gives the holder the right to purchase (call) or sell (put) the underlying asset at a predetermined strike price and a predetermined date in the future. The short position (sToken) allows the holder to withdraw the collateral (if the option was not exercised) or withdraw the exercise payment (if the option was exercised) from the contract after expiration.
4. Leveraging secondary markets: Tokenizing both sides of the contract creates an opportunity for secondary-market trading. Risk preference for long and short positions can now be revealed through the trading of the lToken and sToken. If a User wants to write an options they can now purchase an sToken from the Options.Market AMM — and should they want to reverse/unwind their position, they would sell the sToken back to the AMM. Since the underlying collateral can now be purchased and sold at will, the mechanics of writing options are simplified compared to the long protracted process of available alternatives.
Please note always that an options writer’s risk is almost unlimited (they only receive the premium), and an option buyer’s risk is limited only to the premium they have paid. This is critical knowledge to have in a very complex financial environment.
5. KISS (Keep it simple stupid): Ensuring ease of use, low complexity and an easy-to-explain model means the design hinges on simplicity in design resulting in an oracle-free and fully-collateralized market-maker. The net result is a model rendered to operate as simply as possible with reduced complexity — pricing formulas and oracles are not used.
Now everyone can become an LP supporting the nascent DeFi options market and earning fees in the process.
KAELIN: Have To Say This Might Be The Most Detailed Answer We Have Ever Gotten! Really Great Answer
Everything You Have Just Mentioned Uses The Liquidity
How does the team plan to increase liquidity ? , as this is extremely important for this projects continuation .
Paul: Completely agree! We initially provided liquidity in 2 ways:
1. An #alphadrop (airdrop) of 18% of supply to the $DGVC LP. This is Degen.VC’s primary use case.
2. We seeded our Dual Accelerator Vault smart contract with another 10% of supply.
Some new terms here.
Going forward, we will continue to seed the AV with OSM tokens from trading fees.
And as mentioned by Fraser, 32.5% of supply is set aside for LPP rewards — which we will use innovative solutions to smartly aid liquidity growth!
KAELIN: Great Use 👏 Look Forward To Seeing Liquidity Grow
Lets go into the Tokenomics of the native $OSM Token and what are some of it’s use cases ? As well as how someone would obtain the $OSM Token ?
Paul: Let’s take that in 2 parts:
1. Our approach to tokenomics is all about fair distribution and launch, and to ensure that multiple utilities come from how we position our tokenomics.
Distribution was easy — flip VC economics on its head and empower the retail user to be able to own tokens in great projects at $0. We have acheived this.
Utility is always interesting for us — we start at governance, as it is the easiest for people to understand. Hold tokens, have a say in how decisions in the business are made. I mentioned a new use case — OSM as a settlement layer (under development).
As mentioned, trading fees will be sent to a liquid vault and people can send ETH to it and get back UNI-V2 LP tokens at a discount. This is way better than staking or burning because it increases the liquidity on the pair. (The discounted LP tokens are locked for a period)
2. $OSM trades in 2 places right now:
Where to Purchase $OSM:
🦄 Uniswap: app.uniswap.org/#/swap?inputCurrency=0x9b75848172677042269c63365b57b0a51c21d031&outputCurrency=ETH
📲 Bilaxy: https://bilaxy.com/trade/OSM_ETH
• Where to pool $OSM/ETH:
🦄 Uniswap: app.uniswap.org/#/add/ETH/0x9b75848172677042269c63365b57b0a51c21d031
KAELIN: What marketing strategies has the team decided to use to spread awareness and promote growth and use of the project ?
Fraser: I’m fairly vocal about this. I mean it seems like some projects are endlessly trying to “talk up price”. But it takes time to develop software and protocols require decentralization of course, but also engagement with the open source community.
To this end, our Gitcoin Hackathon will connect the project with 80,000 developers and we will use $25,000 to engage with them. This is starkly different than a VC approach and, let’s say, attempt to control the value that protocols create. We, on the other hand, use the token’s market value to reward the open source community rather than proceeds from a discounted VC sale to pay “founders”. This approach is altogether more organic. More low key. But when the approach works better than the equity style investing approach people will want OSM token bigly!
You. Are. Early
KAELIN: Lastly Does the team have a roadmap in place ? and if so , how has it been kept up with so far ?
Paul: Yeah, we have been quite happy with the progress thus far! We published quite a detailed roadmap in mid-March, here: https://medium.com/options-market/option-market-roadmap-2021-deb82330e2de
We have completed the #alphadrop — we gave 18% of total supply to $DGVC LP’s at zero cost to them — this is an airdro pof course but we believe we are delivering pure alpha to our community.
We added another 10% to our innovative Dual Accelerator Vault smart contracts. This helped liquidity reach a stable $1million right now on the UNI-V2 pair so the token is not like a whipsaw.
The rest of the prior roadmap is now under review and we will get a substantial amount of knowledge from the hackathon to include. This will incorporate a number of ideas I have developed on how the makets should think about fulfilment and settlement — in a decentralized manner!
I’m really excited for what the skills of 80,000 Ethereum devs can bring innovation wise. I’d also love to develop structured derivative investment products…so much scope!
Community Questions
Q: What are your planned for the revolutionise and innovation of Defi with your products?
A: I am bringing my 18 years of Investment Banking experience to the fore. This include derivatives sales and structuring across three continents with a particular focus on emerging markets — and DeFi fits this bill PERFECTLY! I am super excited for the future of this space, including 2nd & 3rd generation derivative, sturctured investment products and all manner of strategies. Good times ahead!
Q: Investors always prefer less risky portfolio. Can you tell me the expected revenue and level of risk involved in Options.Market?
A: I like this question. Let me give you some of my thoughts about crypto investing and especially VC financed DeFi. The most basic premise of good investing is buy low and sell high. Projects are increasingly engineered to lock in gains for VC investors. Crazy Uniswap launches make it look like things are very healthy but the fundamentals are not. Retail is forced by many projects to buy the token disproportionately high. And they are encouraged to do so with irresponsible market. We launch to our community without much fanfair and we grow organically. We use opportunities like this to make people aware. Look at the price, look at the project — stick to the basics.
Q: Options Market Although built as a fork of VC powered anon-project, it will need to gain “trust” as a new project. How will you reassure experienced investors and users to work with your project?
A: Some will “get it” some wont. Venture capital has not seen a real disruptor in 100 years — fact. Degen VC might be the first ever thanks to blockchain. Our community is simply wonderful. Many people have made 100x what other “launchpads” have delivered.
Q: What would the options market protocol look like on Binance Chain? Does the “centralization” put people right off?
A: It’s a question we are looking at. Of course the centralization question is important. But the stock market is centralised right, LOL! So, where liquidity is also matters.
Q: I have read that Deriswap from Andre Cronje will be offering options along with Whiteheart from Hegic. These are still in development. What makes OSM product different? When will it be live? Whats the Main benefits of Options Market to Normal crypto Users & Traders? What is Options Market trying to solve with it’s idea? What’s the relationship between Options Market and Siren?
A: Innovation in the space is incredibly exciting and frankly since the derivative market globally is anything between $300 & $1,000 Trillion (yes, Trillion!) we think that competition is healthy and there is a space for everyone at this early stage.
What I don’t think they have on their side is someone with my experience in these markets — globally verified bank treasurer with SPECIFIC experience in cross-asset derviatives. It’ll be a lot of fun to go up against them in the wild.
Q: Let me know about this, what is the differences between Option market and Be-holder, I think You’re with same team? Is there partnership project?
A: Yep. Behodler is a DEX offering 50% lower swap and if you consider the ability to swap LP for LP tokens 90% lower gas fees. It will leverage the options market protocol layer and it could potentially be a place where the AMMs underlying tokens are traded with regular staples (ETH, DAI etc)
