Opyn Improve Goals to Add Capital Effectivity and Liquidity to DeFi Choices Market
Opyn, a decentralized financial options (DeFi) marketplace, has introduced a number of new features in its updated protocol that aim to make the crypto options markets more efficient and liquid.
While Opyn came to DeFi with an insurance-like product for governance tokens like Compound, its focus has since focused on the options market in the digital assets space. According to Zubin Koticha, co-founder of Opyn, the focal point will be determined by both user interests and the hurdles that decentralized financing is currently facing.
“The biggest problem with DeFi is that [in] There is no need for excessive collateral with traditional financing, ”said Koticha. He added that the different requirements for capital also affect DeFi’s competitiveness against traditional financing.
Simply put, options are financial contracts that give users the right to buy or sell an underlying instrument at a specified price on or before a specified date. Depending on what they think of market trends, traders can use options to bet on the future bullish or bearish nature of the market.
While options in traditional funding have long existed, they are relatively new in the crypto space and therefore have their own hurdles.
Koticha pointed out that in the earlier version of Opyn, users had to deposit 100% of the strike price, the agreed price for the option, as collateral in order to mint and sell one. This is different from traditional options markets where the requirements can be significantly lower.
According to Opyn, the update will add a number of new features to the options market, including cash settlement for options without the need to swap underlying assets, the ability to use income-earning assets as collateral for options, and margin improvements for options.
“We switched our system from physical settlement to cash settlement,” said Koticha. He noted that while traditional markets also meet the need to regulate options for physical goods such as grain, he said that there is no such physical delivery need in the crypto space, and hence little need to actually exchange the asset. Instead, only the price difference needs to be delivered.
While the general push of changes at Opyn is aimed at greater efficiency in handling decentralized funding, the changes are only part of the upgrades in the pipeline. Koticha said Opyn is also planning a protocol upgrade that will combine functionality for short and long net options, thereby freeing up more capital.
In early August, Opyn discovered a vulnerability on its platform when attackers exploited a bug and got away with $ 370,000. According to a report from Cointelegraph, the flaw allowed the attackers to double-issue Opyn’s oToken, thereby stealing the collateral provided by the users.
In response, Opyn blogged a number of measures he would take to prevent another such exploit, and also compensated those users who were affected by it. According to Koticha, the platform has further strengthened its security by conducting additional audits and adding functionality to halt the system.
While a central kill switch may seem counterintuitive to the ever-bustling crypto markets, Koticha said that with plans to introduce a governance token in the future, Opyn is looking to move kill switch controls to decentralized governance in the long term.