Opyn - how invest, sell, buy, create
What is Defi and how does it work?
DeFi or decentralized finance is a set of specialized services that use smart contracts and decentralized applications to work. It is thanks to the use of such technologies that it becomes possible to create an independent financial ecosystem that is not influenced by external regulators and minimizes the human factor in its work.
DeFi is used in the provision of various financial services, which eliminates the need to depend on centralized financial companies. Additionally, the blockchain allows you to eliminate time limits, the system can be used by any user 24 hours a day, any day of the week, all year round.
DeFi is an independent financial system that is completely transparent and open, unlike alternative centralized services. Users directly interact with each other without the participation of intermediary organizations. This is a universal tool for creating a full-fledged decentralized system for solving various financial issues.
Currently, this market segment is actively developing and now there are several key areas in DeFi:
- Loans. Complete services for cryptocurrency loans. Some users provide their coins, while others take them. For both parties, this method of lending is much more profitable and safer than the standard centralized scheme offered by financial institutions.
- Farming. Farming means any action aimed at obtaining tokens for any activity. This may be the provision or taking of loans, the supply of liquidity or voting. The method has gained great popularity due to the ability to earn good interest.
- Aggregators. These are platforms that provide intermediary services. But the structure of the blockchain allows you to additionally assign the role of a regulator of relations between the user and the service provider to the aggregators. The main area of work is exchanges, decentralized applications and other financial services and programs based on the blockchain.
- Synthetic assets. Synthetic assets include contracts whose value is determined on the basis of underlying assets (cryptocurrency, stocks, indices, commodities, etc.). One of the main uses of derivatives is to hedge trade risks.
- Stock. DeFi projects can be used to create and issue shares. Then the applicant bypasses the need to turn to intermediaries, which are financial institutions, as in traditional trading. Despite this, such securities are fully compliant with the law. Shares in the blockchain are tokens of their own kind, which have received some functions and properties from securities. Such shares are called security tokens.
- Escrow. These are platforms that allow you to carry out activities on crypto exchanges, preventing funds from reaching the servers of this exchange.
- Accounts receive DeFi escrow funds, which allows you to completely remove the risks of hacker attacks and wallet hacking inside the exchange.
As you can see, the directions of DeFi development are very diverse. Gradually, other areas of activity and areas where DeFi technologies find their application are emerging.
DeFi is one of the main drivers for the development of the crypto industry. It is not surprising that against the backdrop of a boom in this segment, decentralized options, which are publicly available and do not involve KYC procedures, are gaining popularity. Projects like Hegic and Opyn have proven that there is a demand for even such complex financial instruments.
What is Opyn?
Options are a common type of financial derivatives and their value is determined by the underlying asset. It can be a stock, a commodity or a commodity, a financial index or a currency.
An option contract gives its holder the right, but not the obligation, to buy (call options or call options) or sell (put options or put options) an asset at a fixed price (called the "strike price") at some point in the future. At the time of expiration (redemption), the option contract may or may not be exercised, depending on the market price of the asset.
While options are widely used in traditional finance, they are rarely used in DeFi. A smart contract can issue options automatically and do so instead of a bank by offering call options on assets staked within the protocol.
What is Opyn? This is one of the DeFi platforms that allows you to use cryptocurrency options. In partnership with StakeDAO, the platform offers a covered call strategy in ETH. This strategy generates revenue from the premiums it writes weekly call options to market makers. The goal is, as with any option provider, for calls to remain unexercised at the time they expire. That is, the price of ETH is below the value of the strike price, and thus premiums are accumulated every week, which serve as income for depositors.
In the weeks when ETH trades above the strike price at expiration and the options are exercised, all losses are offset by the fact that the total value of the storage is valued high due to the increase in the price of ETH. Therefore, the strategy can generate income weekly, regardless of whether the options were exercised or not.
And since this is still decentralized finance, additional income is earned with the help of ETH deposits invested in the strategy, as they are used on the Opyn platform. Combined with call option premiums, this provides an additional boost to the annual percentage yield (APY) for strategy savers.
Options have long been one of the main pillars of the traditional financial system. These derivatives provide investors with the opportunity to bet on the future performance of an asset and hedge price risk, effectively using capital. Therefore, opyn protocol is in demand in the market.
How to use Opin? The first version of the protocol allows the creation of American options in the form of oTokens, 100% backed by the underlying asset.
The second version of the opyn protocol has a number of innovative features, including auto-execution and flash release. The latter is based on the concept of flash loans. The platform supports European style options with a narrow range of strike prices and expiration dates. Underlying asset: ETH.
What kind of options are available on Opyn?
Oracles are used to determine the execution price. Each contract is issued as an ERC-20 token and therefore becomes available for trading on any DEX.
Features of Opyn v2 open up the possibility of implementing spread strategies, when one option position can serve as collateral for another. For example, when buying a put option with a relatively high strike price and then using it as collateral to sell a put with a lower strike price.
Support for flash issuance and spread strategies is designed to increase the capital efficiency of trading operations. In addition to this, in June 2021, the developers introduced the possibility of partially securing contracts.
Chainlink oracles are responsible for price data and liquidations.
The Gamma Protocol used in Opyn v2 has been audited by OpenZeppelin and formally verified by the Certora team.
How do I use Opyn?
How to use Opyn in India? First, it is worth noting that for those who do not know what options are, working with the Opyn platform may seem complicated and incomprehensible. Options are a separate type of derivatives. Before working with the opyn protocol, you need to learn the terminology. Understand what options are, how they work, and what strategies are used.
Only after that you can start studying the questions about what is Opyn and how to use Opyn.
To start investing with Opyn, you need to connect your wallet to the platform. This is a simple procedure. Since Opyn is a DeFi platform, you do not need to provide additional information about yourself when registering. You connect the wallet to the platform and you can immediately work.
How does Opyn work?
On the platform, you can buy an option on ETH. For example, if you buy a put or call option on ETH, the underlying asset is ETH. It will then create an oToken or option version of that ETH with the strike price and expiration you are looking for.
After that, the user can either create them and keep them, or buy them on the secondary market, which is one of the biggest differences between all other protocols and Opyn.
You can buy these options (ETH or oETH) either in version 1 of Uniswap or the upgraded version 2 using the 0x protocol.
How to start investing with Opyn in India?
It should be noted right away that Opyn sets restrictions on access to the platform for customers from some countries. India is not on this list, so clients are free to invest with Opyn.
How to use Opyn in India? Everything is very simple. You connect your wallet to the platform and get access to the functionality of the platform. Using the opyn protocol you can trade options on ETH.
Is it safe to invest with Opyn online?
If you decide to invest with Opyn, you need to know that in 2020, attackers hacked Opyn's Ethereum DeFi protocol put options and managed to withdraw at least $371,000 of user money in a double spending attack.
The project operators confirmed the fact of the hack and reported that it only affected ETH put option contracts. Hackers stole the collateral of users selling puts by exploiting a protocol token (oTokens) vulnerability.
After the hack, Opyn blocked the ability to buy the corresponding oTokens and used its own smart contract to eliminate put options and close the loophole for the theft of collateral. A total of 572,165 USDC was withdrawn from the contracts.
The protocol's smart contracts were audited by cybersecurity company OpenZeppelin, but the vulnerability went beyond the scope of the audit.
How does it make a deposit?
You don't need to make a deposit to work with Opyn. This is a decentralized platform, so even if you didn’t know what is Opyn and how to work with it before, you can easily connect to the platform.
To do this, you must have a wallet that is supported by the system. You simply connect the wallet to the platform and start working with it. No further action is required from you.
How to withdrawal?
Since you do not fund your trading platform account, you do not need to withdraw money either. The profit will be automatically credited to your wallet connected to Opyn.