Solv × Buffer: a financial instrument targeting the options market — option voucher
The Voucher is a financial instrument expressed as an NFT that can be used to define and execute financial contracts in a more flexible and visual way.
Buffer Finance, an on-chain options pricing and settlement protocol, coupled with Solv Voucher’s core technology ERC-3525, have effectuated the creation of whole new Financial NFTs called Option Voucher.
In short, the Voucher is a financial tool expressed as an NFT that can be used to define and execute financial contracts in a more flexible and visual way.
Solv has released Vouchers for the allocation market(Vesting Voucher), constructed product(Convertible Voucher) and bond markets(Bond Voucher), while the Buffer team has created Option Voucher that is for the options market.
What is Option Voucher and Why?
Option vouchers are the ERC-3525 version of American call and put options. The holder gets the right to exercise the option voucher if the underlying asset’s price is above a specific strike price in a given timeframe (before the expiry date).
“Solv’s ERC-3525 standards enable the minting of options as semi-fungible NFTs. NFTs with the same expiry, underlying asset, type (Call/Put), and strike price can be merged or split on the size of the option”, said Feynman, co-founder buffer Finance, “This functionality enables NFT marketplaces to be used as a secondary market to buy, sell, and auction option positions without losing the fungibility of a token. Now, that’s a brilliant design and can be a game-changer for the options market.”
Why has Voucher spawned so many product lines?
1. Voucher is highly adaptable and highly flexible
As NFTs for expressing financial contracts, Voucher can automate complex conditions, visually track dynamic information, and allows users the flexibility to define contract content, making it highly adaptable and flexible to be used in a variety of financial scenarios to address users’ diverse financial needs.
How does the Voucher WORK?
a) Define a financial contract;
b) Generate a Voucher NFT;
c) Store digital assets (if the contract requires pledging assets in advance);
d) Track market conditions and make conditional judgements on the final financial assets delivered by the Voucher based on the content of the contract;
e) Execute the judgement, with the Voucher maker delivering the financial assets and the Voucher holder taking out the agreed financial assets.
The power of Voucher is derived from the ERC3525 pass-through standard. It is a semi-fungible token standard designed by the Solv team that combines the information descriptive capabilities of ERC721 with the Divisibility of ERC20, while being supported by all ERC721 infrastructures in the market and having a high level of liquidity.
Solv has submitted draft ERC-3525 to the Ethereum community, which has stepped in review stage and we welcome more developers to participate in improving the standard.
2. Voucher is needed in many areas of the Crypto market
In traditional finance, 55% of the financial markets are in the form of notes and derivative contracts, and over $300 trillion of financial assets are in the form of bonds, derivatives, bankers’ acceptances, certificates of deposit, insurance policies, etc. The real needs of users are driving the market for these financial instruments. Translated into the Crypto world, these assets are Vouchers in a variety of scenarios.
Each Voucher provides a financial contract template for one type of scenario. It is easy and fast for users to create futures, options, bonds, promissory notes and more using just the templates. As each Voucher Template can support the casting of numerous Vouchers with different parameters, it is only necessary to develop one Template to support the diverse needs of users, and the same Template is safe for all Vouchers created based on it as long as it is audited, saving developers a great deal of cost.
Solv Protocol is committed to advancing the concept and ecology of Financial NFTs in the Crypto market by creating a universal marketplace for Financial NFTs, providing a one-stop trading marketplace for all Financial NFTs developed based on the ERC-3525 and Voucher philosophies.
Buffer is an on-chain options pricing and settlement protocol that supports multi-asset option trading against a shared liquidity pool and multi-chain dynamic decentralized option vaults.
Solv Protocol is a decentralized marketplace for minting, trading and managing NFTs that represent financial rights. Solv has offered Vesting Voucher, an allocation management fundraising tool, Convertible Voucher, a structured product allowing DAOs to leverage native tokens, and Bond Voucher, the first market-tested debt instrument in DeFi that helps DAOs tap into the debt capital markets.