Thetanuts Finance V3: Decentralized Options Trading Transformation

Thetanuts Finance is a DeFi platform that offers investors access to advanced financial strategies without requiring in-depth knowledge of the options markets. Find out how Thetanuts Finance can optimize your investments in the world of DeFi by reading this article further.

What is Thetanuts Finance?

Thetanuts Finance is a decentralized on-chain options protocol focused on altcoin options, allowing users to go long or short on on-chain options.

The first iteration of Thetanuts Finance in September 2021 saw the launch of Basic Vaults — where Basic Vaults sells sold out-of-money (“OTM”) settlement options to accredited market makers , and generates returns for users in the form of option premiums.

Also read: What are Market Makers and Market Takers?

Thetanuts Finance Upgrade V3

Thetanuts Finance will transition to a decentralized on-chain options protocol focused on altcoin options.

The first-to-market v3 architecture uses existing Basic Vault LP Tokens to expand new use cases in on-chain options trading — enabled by Lending Market and Uniswap v3 Pools, all housed within the v3 interface.

Thetanuts Finance aims to change this narrative by upgrading to version v3, transitioning into a comprehensive marketplace for on-chain decentralized options.

In this article, we will discuss the challenges of existing DeFi Options Vaults (DOVs), the innovative features of Thetanuts Finance v3, and the potential rewards of the upcoming v3 Incentivized Alpha.

The Current State of DeFi Options

DeFi Options Vaults (DOVs) have gained attention for providing user-friendly structured options strategies. However, challenges still exist, especially during market downturns. 

Thetanuts Finance recognizes these limitations and seeks to redefine the landscape with an upgrade to its v3 version.

Limited Opportunities

Most DOVs act as issuers, primarily selling options to external parties. Thetanuts Finance v3 stands out by meeting the needs of users interested in structured products to go long on options.

Additionally, v3 eliminates long withdrawal periods, ensuring greater liquidity and flexibility.

Not a Completely Passive Strategy

While DOVs often encourage a 'set-and-forget' strategy, Thetanuts Finance v3 offers a dynamic approach.

Users can manage deposits actively, adapting to changing market conditions. This flexibility accommodates active and passive participants.

The Nature of Professional Market Makers

Professional Market Makers face challenges due to capital inefficiencies and limited option volumes in DOVs. Q

hetanuts Finance v3 recognizes this problem and transforms into an all-in-one decentralized options market.

Thetanuts Finance v3 components

source: Thetanuts Finance

Thetanuts Finance v3 introduces three key components: Basic Vaults, Lending Market, and Uniswap v3 pools, all of which can be accessed through a redesigned trading interface.

Basic Vaults

Basic Vaults, the core product of Thetanuts, allows users to provide liquidity, sell options, and earn returns on option premiums.

In a unique feature, users receive Basic Vault LP tokens that represent their share of the underlying funds. 

This token offers versatile utilities, such as:

• Providing Liquidity On The Lending Market. You can deposit Basic Vault LP tokens into Lending Market to earn additional interest on lending.
• Contributing to AMM Trading Fees. You have the option to deposit Basic Vault LP tokens into the AMM, generating additional trading fees within the AMM.
• Going Long on Options. Individuals seeking long volatility positions can lend Basic Vault LP Tokens from Lending Market and subsequently trade them on the AMM, illustrating a long call or long put scenario.
• Close Positions Instantly. Basic Vault LP Token holders have the option to sell a position in the AMM, signaling immediate closing of a short call or short put position, eliminating the need to wait until the end of the Basic Vault period.

Lending Market/Loans & AMM

source: Thetanuts Finance

By leveraging proven smart contracts from Aave and Uniswap, Thetanuts Finance v3 creates a Lending Market and AMM specifically for Basic Vault LP tokens. This allows users to profit from lending and provides liquidity using Vault LP tokens on the AMM. 

Also read: What is an Automated Market Maker?

Liquidity Pools

source: Thetanuts Finance

The Liquidity Addition module optimizes liquidity provision, allowing users to provide liquidity for all three components, accessing up to five yield sources.

Users can deposit assets strategically based on their market outlook, increasing overall yield potential.

Thetanuts Finance v3 Alpha Incentive and Potential NUTS Airdrop

Thetanuts Finance launched Phase 1 of v3 Incentivized Alpha, marking the transition to a fully decentralized suite of on-chain options products.

The alpha, conducted on Arbitrum, invited traders and liquidity providers to experiment with the v3 architecture, providing valuable feedback for improvements.

The alpha was split into two phases, with Phase 1 focusing on traders and Phase 2 introducing liquidity provision. 

Thetanuts Finance has partnered with Coinlist to bring alpha to participants worldwide, with TVL and trading volume influencing eligibility for NUTS token rewards. Users can potentially earn the next airdrop of Thetanuts governance token by actively participating in the alpha.

Conclusion

Thetanuts Finance v3 offers a revolutionary approach to decentralized options trading, overcoming the limitations of existing DOVs. 

The incentivized Alpha launch provides a unique opportunity for users to explore the platform, with the potential to earn rewards via NUTS tokens. 

Also read:

Just Network, Tron's Flagship Ecosystem

What is an Authority Masternode (AM) in VeChain

What is Attestation Ledger and its Role in Blockchain

What is Block Size or Block Size on Blockchain

DISCLAIMER : This article is informational in nature and is not an offer or invitation to sell or buy any crypto assets. Trading crypto assets is a high-risk activity. Crypto asset prices are volatile, where prices can change significantly from time to time and Bittime is not responsible for changes in fluctuations in crypto asset exchange rates.