Comparative analysis
We aim to decide whether a particular cryptocurrency is bullish or bearish by using a financial derivative: perpetual options. We achieve this by tokenizing perpetual options, so that investor can forge and trade these tokens. There are two token types: call token and put token, which correspond to call and put perpetual options. To understand how they work, we have a price interval that contains the current price of a certain cryptocurrency and we anticipate that the price of this currency will change within this interval. If we work with ETH and in case that the price varies within the interval, one can generate antimatter token(call and(or) put) by providing two types of underlying assets, such as ETH and USDT. Typically, one needs to provide more ETH to generate a call token and more USDT to generate a put token. The cost of producing tokens will vary in order to stabilize the platform.
Perpetual Protocol is a decentralized perpetual contract protocol for every asset, realized by a Virtual Automated Market Maker. Perpetual protocol enables traders trade with up to 16x leverage. It enables traders to speculate on a type of asset using another type of asset. The algorithm is
, where
are volume of two types of assets,
is the value satisfying "
is traded at
times
(Or the price of
in terms of
)", and
is an invariant. The trader needs to deposit type a asset in order to speculate type b asset. In math, If one supplies
, he will open long(short) position of amount
in type
asset. In general perpetual protocol is a perpetual contract without expiration date.
Shield is a decentralized risk-free perpetual contract built on ETH, such that traders can speculate. Unlike normal contract trading, shield uses pre-paid funding fee to let trader open position. That is, the trader pre-pays certain amount of asset, which will be shown in and used as his funding fee balance. The balance will decrease each day as the platform takes funding fee. When the balance is zero, the trader either needs to closed his position or to deposit more collateral. For a single position, the risk is finite: the amount he pre-pays. The profit is calculated by gains in speculation-transaction fee-funding fee-transaction fee.
Futureswap is a protocol that traders can speculate one type of crypto asset using stable coin with up to 10x leverage. The liquidity provider will earn FST(Futureswap token) as an incentive to provide liquidity. The trading rules are standard, yet to protect the platform, one needs to pay more significantly higher fees if his direction is in favor of the majority. Typically, when the long and short sides are in balance, the fee is
of the trading amount. However, if the long side is significantly more than the short side, one needs to pay as much as ten times trading fee, vice versa. Higher fee will decrease the potential profit, thus decrease the incentive to play in a particular direction, thus, stabilizing the platform.
Hegic Options allows trader to trade options based on ETH and WBTC. There is no trading fee or gas fees. The traders can hold options contracts up to 90 days. 30 minutes before options expire, they will be exercised automatically. The size of options will decrease after options trading volume reaches certain amount. For example, the underlying asset of an option contract is 10 ETH, but after the cumulative volume reaches certain amount, traders can trade a contract worth 1 ETH. In general, this product simplies the processes of trading and gives trader some benefits with respect to funding fees.
Everlasting Options works exactly the same as perpetual futures with only one difference that the underlying asset is options. Accordingly the formula of funding fee is changed to "short-mark". For example, Consider the $3000 strike everlasting ETH put with funding paid once daily. If ETH is currently trading at $2900, the current payoff of the put is $3000 – $2900 = $100. If the everlasting put is trading for $150 the instant before funding is paid, then the longs would have to pay the shorts mark – payoff = $150 – $100 = $50 per day.
Opyn V2, allows anyone to buy, sell, and create options on any ERC20 asset
Among the six different protocols, there are some similarities and differences. Perpetual protocol and shield are perpetual contracts using different algorithms. Perpetual protocol uses a product as an invariance to stabilize the system, while shield limit the amount of money a trader needs to pay in order to trade, thus, limiting the maximum loss. Futureswap has similar features to Antimatter, because it has dynamic fees to protect the platform. On the other hand, the dynamic counterpart in Antimatter is the cost to produce tokens. The difference is that Antimatter has price floor and price ceiling. It preserves the feature of a straddle(options), but Futureswap does not. Hegic Options is not a perpetual option. one can only hold it up to 90 days. Therefore, the mechanisms is much different to Antimatter. Everlasting Options is perpetual future for options. Since options has many strikes, Everlasting Options has many ramifications. In essence, it s futures rather than options. The big difference is that Antimatter does not rely on oracles, while the other six do. Thus, Antimatter reduces the possibility that one takes advantage of time lag.
Last modified 1yr ago