AMA with tehMoonwalkeR’s High Table — April 21st, 2021
Host Questions
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!
Fraser: Paul and I have been working on the perfect crowdsale solution since 2018. We focused a lot on curation during the dark years (2018–2019). Some of you might know dontbuymeme.com. We launched Degen.VC right after seeing their launch and did not look back.
My background is Engineer, MBA, Olympian. Have worked in innovative finance (traditional) before going down the blockchain rabbit hole in 2016
Elevator pitch
Options.Market is a decentralized options protocol WITHOUT: 1. VCs owning and controlling things, and 2. a founding team bagging tens of millions of dollars. We want DeFi’s best options protocol to be truly open and community driven.
Project explanation
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 believe 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 heck of a lot about structuring options products.
We are 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 — here are the highlights:
- Support our UI engineer hooking up the existing forked protocol to our new UI.
- Write the roadmap for Options.Market v2
- Team formation to do a live fork onto BSC (or other chains as suggested).
- Rewards also need to be improved.
We’re looking forward to creating a brand new use case for the OSM token beyond governance. Massively exciting.
For education purposes with the many newbies that have joined of late as well as the non technically minded, can you give us a breakdown of what we can do with Options Market that even a no coiner could comprehend?
There are 3 basic “levels” of an asset class that one should consider
Level 1: spot market — all are super familiar with this.
Level 2: Futures, forwards and leveraged trading. Those of you who have watched some of the leveraged liquidations in futures markets over the last few months will be all too familiar with that horrible liquidation feeling (especially if experienced it).
We call this trading on an obligation. You are obligated to either deliver the underlying asset, ot cash-settle the difference, when you want to (or are forced to) exit your position.
Options.Market lives on Level 3: options are RIGHTS and not OBLIGATIONS to transact. When you are the buyer of an option, you pay a premium for the RIGHT to purchase or sell the underlying asset.
This means, if the position is in a loss position, you walk away and your only right is the premium you paid for that right.
An important note of caution however: when you are the SELLER of an option, your risk is unlimited and your upside is limited to the premium you earned on selling the option. It is quite important to know ALL your risks before entering the options trading markets.
What would you say sets your platform apart from your competitors out there?
The project that we forked made strides in onchain options in an innovative way. But their proposed “road to protocol” was deeply flawed with venture capitalists owning a huge chunk and the 5 anon founders tokens worth around $50,000,000 days after launch
It’s hard to become a protocol this way. We launched the opposite way — polar opposite — with a free distribution to the Degen VC community. And our next phase speaks to your point…
We now need to truly engage the open source community on the innovation in order to get to true protocol faster. We see the coming Gitcoin Hackathon as a means to unearthing those lego bricks and injecting life into them.
If we can structure the bounties and prizes in the right way it could be paradigmatic for the options market (which is $300tn you know).
This, plus my obvious skills advantage in the derivatives markets, with 18+ years of experience.
Token usecase
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.
In later stages, we will seek to expand the token’s use case beyond this and as a pure rewards token. I will be checking throughout the Hackathon for opportunities to toughen the token, and especially to use it as possible settlement layer for certain types of option structures. I would like to ideate across the product spectrum — structured investment products, collars, spread etc. Nothing should be off the table!
With your AMM(Automated Market Maker), the issue always remains, liquidity. How do you plan to tackle this issue?
Our vision for the near term is to build a massively superior product offering, and to massively increase innovation in the space.
We are offering 5x the liquidity provider rewards of the project we forked, and one of the bounties in the Hackthon is specifically to design enhanced rewards mechanisms for attracting liquidity, without engaging in a race to the bottom on APY and other value-destroying competitions — value destroying for projects, not users of course.
Projects need to start building for longevity, not massive short-term gains, and this is a primary consideration of ours across all our projects.
Partnerships
Degen.VC takes an ecosystem approach to DeFi and one of our first projects, Behodler.io is an innovative DEX provably allowing swaps 50% cheaper on gas than Uniswap
So in our ecosystem we now have a major emerging DEX that can leverage an options trading protocol off course. Many partnerships will arise out of the hackathon especially given the size of the prizes we are offering to kick start collaboration with devs
This is a huge incentive in hackathon terms and we have no doubt that this will result not only in outstanding code, but many opportunities to partner across to ecosystem.
The bane of any great product is users. How do you plan to onboard them en masse?
We have built quite a sizeable dev and marketing fund and our goal is to use the eyes of the 80,000 devs associated with the Hackathon to bring focus onto the project.
With our massively retail-friendly approach to token allocation and liquidity provision (plus rewards), a specific Gitcoin bounty looking into cross-chain adoption (though building a team if necessary) — with the explicit goal of reducing transaction costs and giving users choice — and an incredibly stong, motivated and talented team, we think the recipe is correct to create the conditions for users to find and experience our capabilities.
Use case adoption
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 achieved this.
The balance of tokens are being held to use as community rewards for liquidity provision on the options market pairs.
This totals 32.5% which will reward liquidity providers. This is 5x rewards of Siren with no lockup once live! one of the hackthon challenges will be to solve some of the LPP issues that we see Siren is encountering.
We use a technology called liquid vault to distribute value to the community of token holders. 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)
Funding
Our core belief is that the market should be allowed to decide if projects succeed or not. As it is constructed, the markets have very little say in relative success or failure in Siren as a sizeable quantity of tokens have been sold at highly discounted prices to insiders and most notably some high profile VC’s, who received their tokens at 5–10x better pricing than retail. I wrote about this in a thread here — and why we believe our model is the future:
This reminds us all too well of the ICO boom of 2017/2018 — influential and connected investors getting in on projects at deep discounts to the retail market. Indeed — what is different from a normal centralized VC-type transaction? Very little in our analysis.
So, what did we do? This graphic sums it up perfectly for us:
How does Options Market derive revenue to sustain itself?
The model is being designed such that trading fees are sent on an ongoing basis to our LiquidVault smart contract for users to send ETH and get discounted LP tokens.
Through this mechanism the economic lever of ETH Fee can be used to created a sustainable revenue flow for the project. It really is worth digging more into this smart contract of ours — to this end, here is a short video on how it works (in DegenVC branding)
Community Questions
Q: Would you agree with EVERYONE that community is everything? How important is the community to you? How can we collaborate or help you to develop the project?
A: We are fundamentally about community, and all of our communities will tell you the same. Giving as much supply away for $ zero should tell you all you need to know…
Q: The Options Market Although built as a fork of VC powered anon team-project based, it will need to gain “trust” as a new project. How will you reassure experienced investors and users to work with your project?
A: As doxxed co-founders of Degen.VC, Fraser and I have the benefit of exposed portfolios and massive business experience to make any project we are involved with a success.
We see risk differently to most in this space.
Not only are we the most transparent team in the market, we are also the team that raises ZERO $$ from any of our projects. All of our projects are done via airdrop and LiquidVault, where a massive amount of token supply is GIVEN to retail for FREE. Who else offers such a devastating combination in this market?
