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BitOffer Institute: Uniswap TVL Ranked the First Place on DeFi, UNI Options Rocks

Posted: Wed Sep 23, 2020 9:05 am
by CastyLamer
Lately, SushiSwap tried to grab the liquidity on Uniswap by launching $SUSHI, their governance tokens. After then, Uniswap decided to issue their own governance tokens $UNI, and remade the incentive mechanism of their liquidity pool: Liquidity Provider (LP) can not only get commissions from the fees but also receive $UNI as rewards. In this way, some lost LP came back.

According to the data on defipulse.com, until now, the total value locked (USD) on the Ethereum DeFi protocol reached $9.56B. Uniswap ranked at the first place with $1.91B TVL. The time while being grabbed some liquidity by Sushiswap, the position of Uniswap fell to the 10th. However, after $UNI launched, Uniswap was back to the top of the ranking. In addition, $UNI Options was also listed on BitOffer Options.

As we all know, Uniswap is a protocol based on Ethereum, it aims to provide an automatically tokens exchange between ETH and ERC20s under “Automatic Market Makers” (AMM). The whole process of Uniswap is on chain, which means anyone who has a decentralized wallet can be accessed to the protocol.

Options trading to the cryptocurrency market is a development and perfection since it can be used as the hedging tool for spot trading and futures trading. When the market changes sharply, investors can even invest in it to bet for leveraged profits like $10 budget for hundreds bucks or even thousands. Comparing with futures trading, it does not require any margin, which means that liquidation will never happen. Since then, after Options trading started being launched in the cryptocurrency industry, it is highly embraced by investors.

Cryptocurrency Options now only occupies 1% of the cryptocurrency trading. The developing space in the future for Options trading is still huge. Thus, many whales hold the view that options trading will be the next cryptocurrency trading that tends to attract trillions cash. Therefore, after $UNI, the governance token on Uniswap, launched, $UNI was listed on BitOffer Options.

On Sep 21st, $UNI was listed on BitOffer Options, the most innovative and renowned Options trading provider in the world. At the day $UNI Options launched, the daily volume reached over $100 million. Many investors commented that “The volatility of $UNI is much higher than that of ETH, BTC, and LINK, so the profit space is much more considerable. What is more, as the options trading on BitOffer is American Options. It charges 0 fees, 0 margins with the features of ‘No liquidation, Non-exercise, being available to close order anytime’. And the 7/24 community service plus their excellent App experience make $UNI trading just gorgeous.”.

Based on the survey on BitOffer, users of $UNI options can be divided into 2 parts: 1. Only Buying $UNI options; 2. Using it as the hedging tool for $UNI perpetual swap. The second part took up 40% of the total volume. It seems that many investors still have no idea about the hedging strategy that using options trading against the risk comes with futures trading.

For example, now the $UNI price is $5:
· Open 5x long $UNI with $150;
· At the same time, you can buy 200 $UNI 4-hours put options contracts (the budget of this part is $30).

The first situation is that when $UNI pumps by $1 (20%):
· Your 5x long $UNI will double your assets, which means that you will earn $150.
· Your put options positions will cause you to lose $30 (the budget you used to buy $UNI Options).
· Your net profit will be $150-$30=$120.

The second situation is that when $UNI dumps by $1 (-20%):
· Your 5x long $UNI positions will be liquidated, which means that you will lose $150.
· Your 200 put options contracts will earn $200 as pay off.
· Then your net profit will be $200-$150-$30=$20.

After the calculation above, we can easily see that if we hedge $UNI perpetual swap with $UNI Options, then whether $UNI ups or downs, even our perpetual swap positions are gotten to liquidation, we can still earn profits from the $UNI market. That is how the hedge works.

Please notice that as for now, only BitOffer listed $UNI Options, and it charges 0 fees and 0 margins. In addition, $UNI options on BitOffer support the timeframes in 2-mins, 5-mins, 10-mins, 15-mins, 30-mins, 1-hour, 4-hours, 8-hours, 12-hours, 1-day, 7-day.