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DeFi Derivatives Protocol Ribbon Finance Launches Options Trading on Ethereum Cryptocurrency

The crypto derivatives space is heating up.

Ribbon Finance today launched what it bills as a “high performance” options exchange called Aevo. Built on Ethereumthe first iteration will only offer ETH options, but other cryptocurrencies are expected to become available in the coming months, including Bitcoin.

The platform is built on a “custom” Ethereum rollup, built by the Ribbon team, which Ribbon co-founder and CEO Julian Koh calls “a fork of optimism with changes for the case of use of Ribbon”. Aevo will benefit from “substantial liquidity at launch” through partnerships with five options-focused market makers, Koh said. Decrypt by email.

Options are financial contracts that give traders the option of buying (“call” option) or selling (“put” option) an asset on a given date at a given price. They are often used as a hedge against volatility, as they can guarantee a price for a specific asset.

The decision to launch an options exchange is also in line with Ribbon’s previous products. Theta Vaults, perhaps the project’s best-known offering, relies on an automated options strategy to generate returns for users. Currently, for example, users can deposit the stablecoin USDC in the T-USDC-P-ETH vault, which is backed by an Ethereum put option selling strategy.

These vaults will also be integrated into Aevo. “Vaults will be built on top of the exchange, giving users much more flexibility to choose their positions or hedge them,” Koh said.

The Ribbon Finance product suite

The ribbon was also unfurled Ribbon Win and Ribbon loanwhich, as the name suggests, allows users to earn and lend cryptocurrencies.

It is important to note that loans made through Lend are unsecured and are offered to market makers who have undergone KYC and AML procedures.

At launch, Koh predicts the platform can generate up to $100 million in volume per day. But he bases that hefty estimate on the platform’s volumes dating back to May, before the crypto market crashed, when vaults were processing $50 million a day.

“We can generate a lot more volume,” Koh said, “by allowing traders to do more than just sell options once a week.”

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