2021-06-20 19:34:33
Options trading has become more popular than ever now that anyone can trade from anywhere with a few taps. The barriers to entry have been lowered improving accessibility for the average joe.
In case you don’t know, options are financial primitives that give a trader the choice (or the option) to buy or sell an asset at a predetermined strike price at some point in the future.
Traders can utilize options to hedge against potential price changes or to speculate on the future price of an asset. As DeFi matures, on-chain financial primitives like options become the building blocks for even more sophisticated financial instruments.
If options trading is what floats your boat, say ahoy to SIREN, a decentralized protocol aiming to carve out a unique market niche
by catering specifically to sophisticated users interested in holding and actively trading tokenized options contracts.
SIREN Markets offer seamless on-chain options trading
SIREN is a decentralized protocol which facilitates a marketplace of fully-collateralized, on-chain options. SIREN protocol tokenizes both the long and short sides of an options contract as ERC20 tokens which enables options to be traded via its AMM design requiring no third-party settling mechanism or order matching to complete option settlement on chain. Siren AMM v2 can trade up to 6 SIREN options contracts which all share collateral and payment assets in a single pool. This enables liquidity to be rolled over when a market expires for a seamless UX for liquidity providers.
It starts with liquidity providers depositing collateral into the SIREN AMM pool. So for the WBTC/USDC calls the collateral asset would be WBTC. When you as a trader go to buy options from the AMM, the collateral held within the pool is used to mint a pair of tokens: bToken and wToken. bToken, which stands for buyToken, is sent to the buyer and gives the holder the right to purchase or sell the underlying asset at a predetermined strike price. While wToken, short for writeToken, stays in the pool. If the option is left unexercised, wTokens allow the holder to withdraw the collateral or withdraw the exercise payment from the contract after expiration.
Note, that SIREN AMM v2 only trades bTokens, but not wTokens. Although, the Siren team has stated that trading of wTokens may become available in the future. Users pay a premium to the pool in the collateral asset each time they make a trade. This process results in liquidity providers passively becoming covered option writers, automatically underwriting contracts to meet demand from traders. In addition to collecting premiums, liquidity providers benefit from any slippage in AMM trades and earn SI token.
Rewards from the SIREN Liquidity Provider Program (LPP).
It’s always worth noting the risks associated with providing liquidity.
Roadmap
SIREN Governance
The SIREN Market project was created to bring the features and tools options traders are familiar with from traditional finance to a seamless on-chain experience without sacrificing autonomy. The Siren team understands that a platform built to cater to sophisticated users only benefits from their feedback and collaboration.
SIREN’s native token SI is designed to reward early users placing the future of the platform in their hands via protocol governance. Liquidity providers, traders, and market makers will receive SI token rewards in exchange for their participation.
The most experienced and knowledgeable users will be given the most influence over the platform to help respond to future market demands.
If you want to know more, we recommend joining us:
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Do you desire a more sophisticated options trading experience? If so, SIREN would like to invite you to join them in building a platform that suits your needs. This is an opportunity to influence the platform early in its development. SIREN Ma
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