Because of leverage and hedging, derivatives always have higher trading volume than spots in the crypto market. Nonetheless, in centralized exchanges (CEX), derivative goods flourish and account for considerable trade volumes.
Decentralized exchanges (DEXs) continue to face a variety of challenges, including variable gas costs, poor liquidity, the possibility of liquidation, and the fact that transactions on the blockchain are not reliable, therefore, there are few. Projects centered on the exploitation of derivative goods. As a result, the derivatives market in DeFi is still in its infancy and has enormous potential.
Option is regarded as one of the essential components of derivatives and is being developed extremely vigorously throughout the whole crypto industry. Arbitrum’s investment in derivatives is one of the highest.
Coincu will present the Dopex project, one of the first complete rights contract exchanges on Aribitrum, in this post.
What is Dopex?
Dopex is an Arbitrum-based decentralized options protocol. The project’s goal is to provide liquidity for the crypto community. Moreover, Dopex has the capacity to decrease risks and boost profit efficiency for Option buyers. This function enables participants to supply more advantageous liquidity.
Dopex provides a broad range of options groups. As a result, anybody may join, deposit, quote, and make passive money. The amount earned will be determined by the option’s creation or purchase via the Liquidity Pools. Users may generate immediate income, especially with Dopex.
Option pools are developed for all options on Dopex, enabling anybody to join and deposit/quote to their respective pools in order to generate passive revenue through writing options and purchasing options at a discount via liquidity pools, where they may then make a quick profit.
Users control the protocol using a limited supply management token, DPX, which will also be used to collect protocol and application layer fees.
Dopex also offers a refund scheme for option writers’ incurred losses based on executed options for all epochs. The refunds are given in the form of rDPX tokens with an endless supply.
What’s so special about Dopex?
Dopex allows investors to trade securely while reducing the largest risk. Users may utilize it without fear of jeopardizing the interests of DXP customers.
- Fair option pricing: In terms of price, the Dopex model enables a more realistic and equitable decentralized option chain.
- Deeper liquidity is achieved by enabling customers to purchase and sell options at any actual price.
- Using the rDPX discount code, liquidity providers may balance risk and reduce loss.
- Price efficiency is achieved via discount options that provide quick arbitrage possibilities.
- Constant Profit: As compensation for providing liquidity to certain pools, users may receive DPX governance tokens.
- Complete Mortgage: All Dopex alternatives include pre-existing collateral to keep you covered and eliminate the possibility of third-party default.
- Users may use rDPX as collateral to manufacture synthetic assets like stocks and indices.
How does it work?
The DopeX team has created Single Staking Options Vaults (SSOVs) to guarantee that option authors’ losses are minimized while option buyers have access to deep liquidity and fair pricing. The SSOV reign will last one month. At this time, the option author may deposit the asset, choose a strike price, and then sell the asset as a sale to the call option at a defined price before it expires.
It is easily understood as follows: At the current BTC price of $28,000, the customer transfers 1 BTC into SSOV. At that point, the user’s assets will be locked until the cycle is completed (about 1 month). This user may utilize the smart contract to construct a call option contract and then wait for the contract execution date. As an example:
- If the price of BTC falls to $28,000, the customer will get 1 BTC and profit from selling the call option.
- If the BTC price is more than $28,000, the buyer will lose the difference between the $28,000 price and the call bonus amount.
As a result, in addition to offering derivative products comparable to those found on centralized exchanges, Dopex enables customers to generate extra income by staking and trading options. This will assist users in optimizing their capital.
By selling options across all liquidity providers, Dopex optimizes liquidity and distributes risk. The proposal uses direct choices rather than the laborious trade-in process.
Each user may benefit by participating in the option pool; every quarter, users will get earnings such as premium DPX reward tokens as an incentive. Partially to enhance protocol liquidity.
Dopex has also built volume pools to incentivize protocol adoption and participation in option pools, with the goal of boosting volume by granting a 5% discount on option (buy) transactions.
Those that deposit into this pool will, of course, earn DPX bonus tokens early on to promote use; each quarter, users may choose to continue participating or withdraw their assets at any moment. But, if you withdraw money and do not utilize it, you will be charged a penalty cost of roughly 1%.
Option pricing model
Dopex calculates option pricing using the Black-Scholes equation. Unlike previous protocols, however, the project assures that all strikes’ choices are properly considered.
Dopex delegates are used to implement this approach. Individuals chosen to represent DPX will submit option price coefficients on a regular basis in order to imitate genuine supply and demand and fair pricing.
This gives both buyers and sellers a reasonable choice of price. These delegates were initially five of the leading derivative traders in the crypto industry.
Reimbursements in the event of a loss through rDPX
In the instance of an options group that loses money over the course of an era. The Dopex protocol discount token, rDPX, will be made available. The reimbursement is computed as a proportion of the option writer’s loss in US dollars.
This approach is intended to hedge against losses incurred and given to option pool members. The player will then be assured a bigger profit than if they had written naked options.
Dopex will essentially feature two sorts of incentives for users: function call rewards and action rewards.
Function call rewards
On the ecosystem, this is the most popular reward. This incentive will be distributed to users in exchange for burn fees in certain essential processes.
Liquidity contributions to the Option Pool or Volume Pool are rewarded with action awards.
One of the most intriguing aspects of Dopex is that the platform deposits the fees earned in a private repository. This money source supports the user’s DPX currency staking activity. Users will get revenue from the storage if they stake DPX. The monies obtained may be used to exchange or perform deals on the Dopex platform.
- Token Name: Dopex
- Ticker: DPX
- Blockchain: Arbitrum
- Token Standard: ERC-20
- Contract: 0xeec2be5c91ae7f8a338e1e5f3b5de49d07afdc81
- Token Type: Utility, Governance
- Total Supply: 500,000 DPX
- Circulating Supply: 241,915 DPX
- Platform Rewards: 30%
- Early Investors & Token Sale: 26%
- Early Investors: 11%
- Token Sale: 15%
- Operational Allocation: 17%
- Farming (Liquidity Mining): 15%
- Founders Allocation: 12%
Dopex’s governance token is DPX; by holding DPX, users may vote on the following governance decisions:
- DPX prize weightage per team
- rDPX cashback amount per team
- Group option series threshold
- In the event of an authorisation failure, the pricing factor will be used as a fallback.
- Delegates should be removed and reduced.
DopeX has used the Curve technique to give value to its governance token. DPX may be staked as veDPX, used as margin collateral for options, and create synthetic assets.
rDPX’s endless supply entails farming and dumping, exactly like SLP tokens. It does, however, have restricted emissions. This is due to the fact that it is derived solely from the options writer’s liquidity losses and gains.
rDPX has the following applications:
- Staking rDPX will be a fee requirement for future application layer additions to Dopex (i.e. vault).
- Dopex will provide collateral for rDPX.
- rDPX is used as collateral in the mining of synthetic assets.
- Throughout the protocol, writing techniques will be used to provide deflationary pressure on rDPX.
Using rDPX as fees and increasing staking rewards can put a lot of pressure on the market. While DPX can mint synthetic assets as well, the protocol manages the collateralization rate to encourage the use of rDPX instead. Additionally, the protocol is now proposing a v2 model to assure the long-term viability of rDPX.
To get the governance token, DPX must be frozen for a certain length of time (veDPX). Users are able to vote under this governance. Voting power will be important to the Dopex platform’s operation since it dictates gauge weights to pools, which define the quantity of emissions particular pools get.
Dopex intends to leverage this strategy to provide deeper liquidity for certain SSOVs in the same manner as Curve does for specific pools.
veDPX holders may also vote on strikes for our SSOV options, strikes for IRO options, V2 parameters, and other Dopex-specific issues.
Locking DPX for up to 4 years will be available, with lockers getting veDPX equal to the period of the lock – the longer the lock, the more veDPX users receive. Since veDPX is the governance token, individuals that lock for a longer period of time will have greater power over Dopex liquidity distribution.
In addition, holders of veDPX get platform fees and increased pool prizes. veDPX, like veCRV, will deplete over time as an unlock approaches to guarantee that holders with a long-term commitment in Dopex have a bigger influence in governance.
Dopex’s development team is mostly Anon team like TzTok-Chad & witherblock.eth. Details about the core team have yet to be revealed.
Investors and Partners
Several of Dopex’s investors are important participants in the DeFi industry. Having extensive knowledge and expertise in both cryptocurrencies and conventional finance. Every quarter, investors trade billions of dollars in crypto derivatives.
Depox is not well-known in the crypto community due to the scarcity of information. Yet, many people still see this as a possible initiative with significant development potential in the future as the Arbitrum ecosystem matures.
This protocol is at the forefront of several technologies that will draw a considerable quantity of liquidity, increasing income and accumulating value for veDPX holders.
DopeX will become one of the top options protocols to monitor as institutional and retail players continue to participate.
DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
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