An Overview of On-Chain Options in DeFi

Quick take

  • Options are foundational infrastructure for any financial system, including DeFi.
  • Trading volumes for options on cryptocurrencies like BTC and ETH have grown significantly in the last year, but the majority of this volume is on centralized exchanges. 
  • Automated market-making systems have been extremely successful bootstrapping liquidity in swaps and lending, but have not taken off for options so far.
Options are financial contracts that allow investors to buy or sell an underlying asset at a fixed price on some set date in the future. They can used by investors for a variety of purposes including hedging risk, generating income, and leveraging positions.  On-chain decentralized options can enable even more use cases as a critical […]

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