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.
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:
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.