Options are a commonly used instrument in traditional finance. Similarly, we also have Options in Crypto, but not much interest in the community. This article will help you learn a new project in the Options array, which is Arrow Markets, along with the project’s mechanism.
What is Arrow Markets?
Arrow Markets is an options project (Options) on Avalanche, built using the mechanism AMM. The name of Arrow Markets is inspired by the insight of Nobel Prize-winning economist Kenneth Arrow, that options contracts can form the basis of the prices of financial assets, making it possible for users to generates a wide variety of derivatives and rich structures from simple options.
Highlights of Arrow Markets
The structure of Arrow Markets consists of two Pools:
- Trading Pool: Contains the net premium (Net Premium) of both Long Short parties, as well as the Writers collateral.
- Insurance Pool: Users can deposit assets there to receive transaction fees, as well as a part of the profits from the above Pool. In return, the assets in this are used as insurance in case of problems.
The platform works by combining a Decentralized Aggregate Counterparty (DAC) with an options engine. Thereby creating a decentralized financial market. DACs and options can run on blockchains that interact with the Ethereum virtual machine (EVM Blockchain).
If in the traditional market, an option writer needs a buyer in order to exercise, then in Arrow Markets there is no need for two people to participate. Option prices on the Arrow platform are set by a Contigen Claims AMM, allowing users to buy or sell options without having to match other market participants.
Arrow Markets token information
Arrow Markets has not launched a token yet. However, they have plans to launch a token with the following functionality:
- Join the Insurance Pool as an LP. From there receive transaction fees, as well as a portion of profits.
- Project management.
Roadmap & Updates
11/2021: Launch of Fuji Testnet.
December 2021 – February 2022:
- Launching Trading Competition.
- Audits.
- Community Connection.
February 2022: Mainnet launch on Avalanche.
Project team, investors & partners
Project team
Team was founded in 2020 by Patrick Kiefer and Edward Mehrez. Both have economic backgrounds.
At Cornell’s Cryptocurrency and Contracts Initiative (IC3) Workshop in July 2020, Patrick and Edward joined Austin Liu and Preston Rozwood to produce a new version of the Arrow protocol.
Investors
Arrow Market received $1.4M from Framework Ventures, Alameda Ventures, QCP Soteria, DeFi Capital, RenGen, CMS Holdings, Avalanche Foundation and Delphi Digital Ventures.
Partner
Updating…
Overall rating
In general, the Options market in Crypto has been around for quite a while, but nothing stands out. The most prominent name currently is Opyn, but TVL is only $245M, quite far from the top 10 Lending, AMM projects.
The reason may be because the way it works is relatively complicated, as well as not having a significant Promote, so users are almost not interested in Options. In addition, most users in Crypto have a small amount of capital, so Future, Margin seems to be more suitable for making profits.
Therefore, whether Arrow Markets has large funds behind such as Delphi Ventures, Alameda Research or Framework, or improvements in operating structure. But if you want to have a breakthrough compared to previous projects, the team must have a Marketing plan, as well as appropriate Incentives.
In addition, in terms of the ecosystem, Avalanche is one of the very potential ecosystems, with growth both in terms of TVL and AVAX price. Options on Avalanche are also empty, so Arrow Markets will have the advantage of being first.
Similar projects
Thales: The project works in the Binary Option array on Ethereum, helping users to protect themselves and speculate on the price of crypto assets, commodities, stocks, stock indices,… Users can buy and sell, exchange, create binary options on Thales’ Order-book.
Lyra: Project about decentralized Options (Options) on Ethereum. Similar to dHEDGE, Lyra is also a protocol built on top of Synthetix. However, due to the limitations of Ethereum, Lyra decided to launch on Optimism – Layer 2 of Ethereum.
summary
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Source: What is Arrow Markets? Options project with AMM mechanism on Avalanche
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