At SDX, we have devised a unique approach to address the challenges observed in the DeFi Option Space:

  • Automated Market Maker (AMM) Architecture: By implementing an AMM architecture, we eliminate the need for market makers to bootstrap an option market, thus reducing the upfront costs associated with securing market-making agreements for liquidity.

  • Better Risk-Adjusted Yield for LPs: Liquidity providers can expect improved risk-adjusted yields, as options will be sold at a premium relative to the calculated mark price.

  • Comprehensive Volatility Surface Quoting: Our AMM provides quotes across the entire volatility surface and option tenors, posting collateral only when a trade is matched. This is a marked improvement over CLOBs.

  • Alt-Coin Option Markets: Our dual asset pools with a long delta, short vega strategy inherently accommodate alt-coin option markets. This approach is similar to covered call/put selling vaults, enabling the bootstrapping of option markets by collateralizing and minting new options for sale. This feature caters to traders seeking convexity exposure on alt-coins like BONK and GMT.

  • No Bad Debt or Counter-party Risks: All options sold or purchased on SDX are fully collateralized using PsyOptions' Tokenized Euros Protocol, eliminating the risks of bad debt or socialized losses due to liquidation engine failure.

  • Support for Capital-Efficient Spread Strategies: Spread strategies on SDX require only the maximum potential loss as collateral, making it significantly more capital-efficient compared to posting individual collateral for both legs of the spread.

  • Automated Rebalancing: Dynamic bid-ask spreads adjust automatically to incentivize trades that rebalances the LP greeks to a target value. Capital utilization fees are charged to encourage capital-efficient trades, such as spread options and purchasing options from existing inventory.

  • Simple and Delightful UX: Taking inspiration from popular consumer applications, SDX creates a simple and delightful option trading experience, making crypto options accessible.

Last updated