DeFi Derivatives Protocol Ribbon Finance Launches Options Exchange on Ethereum

The crypto derivatives space is heating up. 

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

The platform is built on a “custom” Ethereum rollup, built by the Ribbon team, that Ribbon co-founder and CEO Julian Koh calls “a fork of Optimism with changes for Ribbon’s use case.” Aevo will enjoy “deep liquidity at launch” thanks to partnerships with fiver options-centric market makers, Koh told Decrypt via email.

Options are financial contracts that give traders the ability to buy (“call” option) or sell (“put” option) an asset at 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 move to launch an options exchange is also in line with Ribbon’s previous products. Theta Vaults, perhaps the project’s best-known offering, leverages an automated options strategy to generate yield for users. Right now, for example, users can deposit the stablecoin USDC into the T-USDC-P-ETH vault, which leverages an Ethereum put-selling strategy.

These vaults will also be integrated with Aevo. “The vaults will be built on top of the exchange, giving users much more flexibility in choosing their positions or hedging them,” Koh said.  

Ribbon Finance’s suite of products

Ribbon has also rolled out Ribbon Earn and Ribbon Lend, which, as the names suggest, let users earn and lend cryptocurrencies. 

Importantly, the loans made through Lend are un-collateralized 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 figures from back in May, before the crypto market crashed, when the vaults were processing $50 million a day.

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