EP 39: Opium DeFi Options Review | Opium Token Economics and Token Staking | $OPIUM Game Theory
Today, we have a chat with Andrey Belyakov, Founder of #Opium network. We chatted about derivatives on blockchain.
Financial derivatives are an important component of the financial markets, as they enable risk management. The decentralised derivatives market is expected to grow exponentially with DeFi’s growth and, as a result, a widespread and robust financial infrastructure is required.
Great point of derivatives on DeFi:
1) auditable
2) transparency. E.g. what the CDO covers
3) not having to read through 100-page legal contract
One of the problems in the derivatives space is the lack of liquidity. Esp when assets are exotic and liquidity is an issue.
Solution:
1) liquidity mining
2) mirroring liquidity in CeFi
Opium is a financial protocol for decentralised financial derivative products. Opium Protocol is completely based on open-source software and smart contracts. In addition to conforming to values from the DeFi space and possibly incorporating DeFi currency market and protocols, the Opium Protocol is designed to also incorporate into the traditional financial sector and market participants.
Opium allows the creation, settling and trading of decentralised derivative products on Ethereum. Opium combines any Oracle with any financial tool (e.g. Dapps can interact with Opium). Every position represented by a token can be traded, sent or stored.
DeFi and CeFi bridge is an innovation, making it interesting for institutional money to come in
Benefits (e.g. CDS)
1) willing to take lower returns but have to guarantee it
2) capital efficiency by un-correlating assets
3) derisking
Derivative instruments built on top of the Opium Exchange always have limited potential losses and gains. Through a $ OPIUM token and a DAO, the Opium Protocol and its ecosystem will, over time, be completely governed by everyone.
E.g. CDS used as insurance instrument
Liquidity comes in naturally because institutions are keen on investing money there and they purchase CDS to cover their risk.
We also dived a little more into risk management and pricing models for options. You can find more details about that here: https://youtu.be/i1k13MbOLgw
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*Disclaimer*
This is not financial advice. Information shared is found publicly on the internet. All analysis and opinions are my own. The purpose of sharing the information is for education and knowledge sharing. The information shared is accurate at the time of recording. Purchasing cryptocurrencies poses a considerable risk of loss. Past performance does not indicate future results.
#economicsdesign #tokeneconomics #tokenomics #DeFi #opium #options #cefi #derivatives
by Economics Design
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