Options Protocol

The term "Options Protocol" primarily refers to decentralized finance (DeFi) platforms that facilitate the trading of options on blockchain networks. These protocols leverage advanced algorithms and smart contracts to enable the trading, mitigation of risk, and liquidity provision for options, often using ERC-20 tokens or other crypto assets. Here are key insights into different options protocols mentioned by experts:

1. Pods Finance:

   • A DeFi options protocol called Pods has been released on the Ethereum mainnet. It allows users to buy and sell puts, provide liquidity, and earn yield. Interestingly, despite being on a blockchain, it is deployed on the Ethereum layer one, which is unusual since many similar platforms choose layer two due to cost and speed efficiencies. 1

2. Lira:

   • Lira is noted for being DeFi's first fully automated market maker for options, employing a novel pricing model based on the Black-Scholes formula, traditionally used in financial markets for options pricing. The protocol aims to address the challenges of high computational requirements of options trading by operating on layer two solutions like Optimism to manage pricing, liquidity, and risk more efficiently. 2

3. Lyra:

   • Lyra focuses on the creation and management of on-chain options markets. It uses an innovative approach to price options through a volatility model that aims to map the option surface accurately. By doing so, it enables a two-way market for implied volatility, which is crucial for precise options pricing. Lyra also aims to provide a platform where projects can create options vaults, essentially enabling decentralized options trading directly on the blockchain. 3 4 5
     • 

       1

       Bankless Options Protocol

       00:32:27
     • 

       2

       DeFi Options Revolution

       00:38:21
     • 

       3

       Exploring On-Chain Options

       00:04:08
     • 

       4

       The Future of Options

       00:08:59
     • 

       5

       Lyra's Innovation in Options Pricing

       00:11:36
     • 

       6

       Scalable Insurance Options

       01:22:27

4. Opyn:

   • In a discussion about scalable options for insurance, the Opyn protocol was highlighted. It uses O tokens to facilitate insurance-like coverage through options, demonstrating a scalable and less governance-heavy approach to leveraging options for practical applications beyond mere trading. 6

These protocols are integral to expanding the functionality and accessibility of financial derivatives in the decentralized ecosystem, enabling more versatile financial strategies and risk management tools within the blockchain space.