The crypto options market has experienced significant growth over the past few years. Despite the current bear market, open interest in Ethereum (ETH) options has reached an all-time high at around $8 billion. In comparison, open interest in Ethereum futures is down more than 50% since the market peak in Q4 2021. This shows that more and more traders, both retail and institutional, are becoming more sophisticated and starting to trade more complex derivatives, especially options and structured products.
Choice in DeFi
In the decentralized finance (DeFi) space, we witnessed the creation of the first wave of option protocols in 2020, most notably Opyn and Hegic. However, these early options protocols had trouble attracting users. In 2020, the total value locked (TVL) in the options category was below $10 million, while the cumulative trading notional volume of these protocols was also below $100 million.
This seems to have changed in April 2021, when Ribbon found a way to package option contracts into a structure familiar to DeFi users - namely "vaults". This form, now known as a decentralized option vault (DOV, “DeFi Option Vault”), gained significant traction upon its launch. Within 18 months of launching its first vault, Ribbon’s options trading notional volume exceeded $10 billion, and the locked value soared to more than $300 million. By the end of 2021, the vast majority of options trading volume on the chain was driven by Ribbon vaults.
Limitations of DOV
Although DOVs are simple to understand and easy to use, they are often too simple and inflexible for professional traders. DOV only allows users to sell options, not buy; users can only sell one type of option (weekly, out-of-the-money options). This meets the needs of passive retail users, but not professional traders.
Launch of AEVO: To solve these problems, we launched AEVO, a next-generation exchange of choice. AEVO is a high-performance, order book-based decentralized exchange with all the features professional options traders need. This includes a robust margin system (with portfolio margin), and hundreds of tradable instruments, including daily, weekly, monthly and quarterly options. All of this is built on a custom EVM rollup designed for scale and rolled up to Ethereum for security.
AEVO aims to be the first place to trade options on-chain. The three main advantages that AEVO brings to users include:
100+ instruments with multiple strike prices and expiry dates
AEVO's diverse options allow traders to flexibly adjust their strategies based on market trends.
Deep liquidity, working with the world’s top options trading firms
This deep liquidity ensures users can execute trades at better prices and reduce the risk of slippage.
Instant registration, supports depositing USDC from any EVM chain
Users can start trading quickly and easily without cumbersome procedures.
The perfect combination of AEVO and Ribbon
Eventually, AEVO will integrate with Ribbon and become the venue for Ribbon option contract settlement. This means that the Ribbon vault can provide a steady flow of transactions to AEVO (currently around $80 million per week), and AEVO can also allow for the establishment of more complex vault structures. This combination will undoubtedly drive the further development of decentralized options trading.
Future Outlook: As more and more traders enter the crypto market, especially options trading, the emergence of AEVO provides them with an advanced platform that meets their needs for flexibility and complexity. AEVO is not only a trading tool, but also an important force promoting the development of the entire DeFi ecosystem.
In the future, AEVO will continue to expand its product lines and services, striving to provide users with a better trading experience. As technology advances and the market matures, AEVO is expected to become the leader in on-chain options trading, helping more traders achieve their investment goals.
In short
The launch of AEVO marks a new era for decentralized options trading. Whether you are a retail investor or a professional trader, you will find a trading method that suits you on this platform. With the continuous development of the market and the continuous innovation of technology, AEVO will bring more opportunities and possibilities to users.
Through AEVO, decentralized options trading will no longer be an unattainable dream, but a reality within the reach of every investor. Whether you are a new trader or a seasoned expert, AEVO will become your indispensable partner in the crypto market.