May 3, 2021

Introducing Dopex — an all-round efficient options protocol

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Options are essentially contracts that allow its holder to buy (Call) or sell (Put) the underlying asset at a certain price (strike price) to the person that sold the options within a specific amount (expiry) of time. Options are tricky and efficient options that benefit the purchasers and writers alike are even trickier. Dopex is a Decentralized OPtions EXchange platform that aims to solve the nuances and intricacies that come with option writing and purchasing by offering:
  • Fair option pricing
  • Maximum liquidity
  • Capital efficiency for writers
  • Cheaper options for purchasers
  • Incentives for all protocol participants
  • Rebates for option writers in case of losses via rDPX
  • Minimal fees and maximum speed via L2

Overview

In traditional finance and existing Centralized Finance (CeFi) option providers such as Deribit, users have to decide strike prices and option expiries they would like to sell while constantly scanning order books for demand on the buy-side. This can be a tedious and slow process manually and needs constant monitoring — with parameter updates in case it is being done in an automated manner.
Dopex uses option pools to allow anyone to earn a yield passively. This is done by selling options to purchasers with minimal interaction with the protocol. Pool participants can simply deposit base (BTC, ETH, LINK, etc) or quote (USD stable coins) assets to a pool. These would then be utilized as liquidity for users looking to purchase call and put options. At the end of every epoch — Friday 8 AM GMT for weekly or monthly pools — pool participants would be able to collect their share of pool holdings. These include premiums paid for all options relative to the size of the pool as well as DPX token rewards at the initial stages as an incentive for providing liquidity.
Option purchasers will be presented with call and put options. The strike price for the options will range from -X% of the current Asset price to +X% with constant increments. Eg: If the user wants to buy Bitcoin options and the current price of BTC is 60000$ with 500$ increments and a 10% range. The user will be able to buy options where the strike price ranges from 54k to 66k with 500 dollar increments. These values may differ for each option pool and can be changed via governance votes. Dopex also uses its own innovative and state-of-the-art option pricing model that replicates volatility smiles — which ensures fair and optimized option prices across all strike prices and expiries which in turn benefit both option sellers and buyers.
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What makes Dopex dope?

  • Option pools
Through the use of option pools, Dopex maximizes liquidity and shares the risk of option writing between all liquidity providers, while not having to deal with any of the complexities that come with option writing manually.
  • Option pricing model
Dopex uses the Black-Scholes equation to determine option prices. However, unlike other protocols, Dopex ensures that options for all strikes are priced correctly. This is possible through Dopex delegates — who are representatives with staked DPX that are elected to regularly quote multipliers that affect option prices to replicate real supply and demand as well as fair pricing. This provides fair option prices to both buyers and sellers. Initially, Dopex delegates are 5 of the largest derivative trading firms in the crypto space.
  • Rebates for option writers in case of losses via rDPX
In case an option pool incurs a net loss during an epoch. The Dopex protocols’ rebate token, rDPX, is issued. Rebates are calculated based on the percentage loss incurred by option writers in USD. And a percentage of rDPX relative to the losses incurred is minted and distributed to option pool participants. This ensures superior returns in comparison to writing naked options.
  • Minimal fees and maximum speed via L2
Dopex is scheduled to launch on Optimism mainnet to minimize fees required to purchase options and to complete transactions in the least amount of time.

Protocol tokens

DPX — Dopex Governance Token

DPX is the limited supply governance token for the Dopex protocol and is used to vote on protocol and app-level proposals. Apart from being a vanilla governance token, DPX also accrues fees and revenue from pools, vaults, and wrappers built over the Dopex protocol after every global epoch.
The Total Supply of the DPX token is 500,000 (500k).

RDPX — Rebate token

rDPX while having no supply cap — has mechanisms in place to avoid it from being valueless while also providing intrinsic value to the token.
  • rDPX would be a fee requirement for future app layer additions to Dopex such as vaults.
  • Dopex would support rDPX as collateral to borrow funds from Margin to leverage option positions.
  • rDPX would be used as collateral to mint synthetic assets, commodities, etc. which could further be used to create options for synthetic non-crypto assets.
  • Fee accrual can be boosted via staking rDPX.

Meet the investors

Dopex has an array of investors that are key players in the DeFi space and have a vast amount of knowledge and experience in the crypto space as well as traditional finance. They trade billions in crypto derivatives volume every quarter.
Some of Dopex’ early investors include:
  • Orthogonal Trading
  • Ledger Prime
  • Orca Traders
  • Pattern Research
  • SCC Investments
These 5 firms are also Dopex delegates responsible for quoting option pricing multipliers, so you can rest assured that Dopex options are fairly priced.
About Dopex
Dopex is a decentralized options protocol that aims to maximize liquidity, minimize losses for option writers and maximize gains for option buyers — all in a passive manner.
Dopex uses option pools to allow anyone to earn a yield passively. Offering value to both option sellers and buyers by ensuring fair and optimized option prices across all strike prices and expiries. This is thanks to our own innovative and state-of-the-art option pricing model that replicates volatility smiles.

📱Stay Connected

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🚨IMPORTANT

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