Author: pdbeat

Sources: Dopex docs, Article on Cryptobriefing.com

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. It runs on Arbitrum, a Layer 2 Optimistic Rollup technology to ensure low-cost and faster transactions compared to Ethereum mainnet.

Dopex has two protocol tokens, DPX (limited supply governance token that also accrues fees and revenue from pools) and rDPX (rebase token for losses incurred by pool participants)

Dopex offers Option Pools (OP) as well as Single Staking Option Vaults (SSOVs). As currently only the latter is live, we will be focusing first on SSOVs, but more info can be found in the OP section.

Single Staking Options Vault (SSOV)

Similar to single staking vaults, SSOVs allow users to lock up tokens for a specified period of time and earn yield on their staked assets. SSOV currently supports DPX, rDPX, ETH and gOHM.

Protocol users can deposit the above tokens into a contract which then sells these assets as call options to buyers at fixed strikes that they select for end-of-month expiries.

How do they work?

SSOVs go as follows:

  1. Before the beginning of a month-based epoch, strikes are set for the month-end.
  2. After that, the stakers deposit and lock liquidity (ETH, gOHM, DPX, and rDPX) into a vault at the beginning and for the duration of each monthly epoch.
  3. The vault contract then sells call options on the underlying assets to earn premiums and deposit the funds in single staking DeFi pools to generate additional yield. As a result, Single Staking Option Vaults provide boosted yields to stakers or option sellers, as well as capped upside, and partially mitigated downside risk.

Single Staking Option Vaults represent a simple and cheaper way for buyers to permissionlessly purchase call options on crypto assets vs CEX.

https://lh3.googleusercontent.com/ZABwC4NFG14eZVZm5pT6ocRGhRSTy4JvZYDALvpV0DHKBEgERXp1uCUke2AonTMcSYEYil9rWXTPrwQ2acIQq-H7AacEqNvdc7-GmvMFVJb8Rt4kM6E_WTETF1Vm2kk4Z_wqZaDD

The advantage of Dopex is that  it offers a user experience for buying call options that rivals the major centralized exchanges. There are only three steps to take: select options size, select strike price, and purchase.

https://lh4.googleusercontent.com/HcrPbdF7XT1PmV_05r54AYn3uMx8zJP-H4tWOZIL_2074MfGthKMMMsLT9y4q9ohFdQbVW6e2hDA3o-OyT16rlpwylKF7HvuZmYj82rNL4xrHyzzE6-NBh65_H5LxfiJ6_23cp6s

Dopex UX (right) is quite simple compared to CEX like Deribit (left)

The call options are European, meaning the buyer can exercise them only at the expiry date. If the options are “in the money” at expiry, the buyer profits at the cost of staker. By contrast, if the options are “out of the money” at expiry, the buyer loses what they paid, and the money or the premium stays with the staker or options seller.

Ok ser cartel, but why is this important for Redacted Cartel and relevant in the Curve Wars?