Dopex is a decentralized options protocol that aims to maximize liquidity, minimize costs and reduce risk. Discover the features, benefits and direct access to the platform.
Dopex is a decentralized options protocol which aims to maximize liquidity, minimize losses for option writers and maximize gains for option buyers – all in a passive manner for liquidity contributing participants.
Option pools are created for all options on Dopex, which allows anyone to participate and deposit base/quote for their respective pools to gain passive income from option writing and purchasing discounted options through liquidity pools which could then be arb-ed for an instant profit.
The protocol is governed by users via a limited supply governance token, DPX, which would also be used for collecting protocol and app layer fees.
Dopex also offers a rebate system for losses incurred for option writers based on exercised options for every epoch. The rebates are paid in the form of a theoretically infinite supply token, rDPX.
Rebates are calculated based on percentage losses incurred by option writers for an epoch and a percentage of rDPX relative to the value of losses incurred are minted and distributed to option pool participants. The percentage rebate is determined by a governance process based on votes by DPX holders within the protocol.
The rebate allows for option writers to gain a superior return in comparison to writing naked options or hedged option writing strategies of any sort.
rDPX can in the future, also be used as collateral to borrow capital from the margin pool to leverage option positions or to mint synthetic derivatives of assets supported within the protocol such as – cryptocurrencies, stocks, ETFs, commodities, currencies etc.
This inherently gives the rDPX token real value and creates a positive feedback loop for liquidity to grow and option writers/traders to participate considering the deep liquidity, cheaper options to purchase and higher ROI from option writing.
Dopex allows users to participate in the protocol via option and volume pools:
Option pools allow users to earn a yield passively by providing base asset and quote asset liquidity for users who’d like to buy call and put options respectively.
Volume pools are created for the purpose of boosting volume within the protocol by offering a 5% discount on all option purchases made using volume pool funds.
In traditional finance and existing CeFi option providers such as Deribit, users looking to sell volatility have to decide which strikes and expiries they’d like to provide liquidity for while constantly scanning orderbooks for buy side liquidity.
This can be a tedious and slow process manually and needing constant monitoring and parameter updates incase of it being done in an automated manner.
Dopex makes use of option pools allowing anyone to earn a yield passively by selling options to purchasers with minimal interaction with the protocol. Pool participants can simply deposit base or quote assets to a pool which would be utilized as liquidity to users looking to purchase call and put options. At the end of every epoch (weekly or monthly), pool participants would be able to collect their share of pool holdings including premiums paid for all options relative to the size of the pool as well as DPX token rewards at the initial stages as an incentive for providing liquidity.
In-case of losses incurred by the pool when purchasers make a net profit on their option purchases, pool participants would receive rebate tokens – rDPX – which would be minted equivalent to 35% of all losses incurred by the pool. This would make providing liquidity to dopex a better alternative to vanilla options writing on other platforms.
Rebate tokens would be required for usage across the protocol including initial token distribution via yield farming, generating synths, fee payments etc. giving it intrinsic value for long term sustainability.
Option pool may be either weekly or monthly pools – with varying levels of token incentives for liquidity provision considering the longer wait times to epoch expiries for monthly pools.
Incentivizing users to provide liquidity would make for a liquidity rich protocol – however without any genuine usage, this would lead to a chicken and egg problem in terms of generating actual usage of the protocol. To incentivize option market professionals to utilize the protocol and actually purchase options, Dopex makes of volume pools.
Volume pools allow users to deposit funds prior to weekly global epochs and use funds from the pool to purchase options from any option pool at a 5% discount. Volume pools create an arbitrage opportunity for sophisticated option traders purchase options at a discount and immediately arb them against other exchanges for a quick profit.
Volume pool depositors are also given DPX token rewards at the initial phases to further incentivize pool usage. At the end of every epoch, users can withdraw any excess funds from the volume pool – however they would have to pay a 1% penalty at withdrawal for non-usage of funds. All penalties are withdraw-able by DPX governance token holders in the form of protocol fees.