Deltatheta: comparison with existing solutions.

delta.theta
7 min readApr 28, 2023

In this article, we will discuss what deltatheta is, what this protocol is capable of, and what sets it apart from existing solutions, both among the number of options vaults and existing options protocols.

So, our story.

First of all, our team comes from the traditional stock market. We have been working in the stock market since 2007 and specialize in stocks and derivatives. Our team consists of people from both sell-side and buy-side. When developing a product or any functionality, we can apply a comprehensive approach.

Four years ago, we switched to crypto options on Deribit, and after some time, we began looking for a solution that would allow trading on a blockchain platform similar to Deribit. We did not find such a solution, and thus, deltatheta was born.

Although, in reality, we saw solutions at that time, but in our view, they were not entirely applicable to traders. For example, what does “minting” an option mean when you can simply place an order in the order book?

I support the use of the order book and RFQ (request for quote). I believe that in options, unlike the spot market, the use of AMMs (automated market makers) is simply impossible because if spot or Uniswap is a function of y=kx+b, then in options, there are greeks such as gamma and vega that make any attempt to make the world y=kx+b useless.

What is deltatheta?

Deltatheta is an options protocol with an order book. In other words, it is a blockchain-based order book that describes the logic of classic options contracts (it has passed three audits).

What can be done on deltatheta:

  • Trading on any EVM blockchain (L2, ZK, etc.);
  • Any ERC-20 token;
  • Place market or limit orders on any strike and any expiration date;
  • Sell and buy options;
  • Close a position on a sold options;
  • Stake collateral on a limit order for a seller;

Note that American-style options are traded on deltatheta, and for a seller on version V2, it is necessary to provide 100% collateral.

At any time, the market maker sets quotes on deltatheta for the central strike. That is, if you see something in the order book, you can easily take it. If you need anything else, simply contact the market maker in the Telegram chat → https://t.me/deltatheta_TradingGroup.

You opened the terminal and see this.

If you want to buy or sell one option contract at current prices, simply click on the blue cross on the right and place a market order. If the price doesn’t suit you, you can contact the market maker in TG → https://t.me/deltatheta_TradingGroup and place a limit order by clicking on the Limit order button.

I mentioned the option contract at current prices. What does it mean? Let’s say the Bid for a Call option is 0.66 (1) and the Ask is 0.72 (1). This means that one Call option contract can be bought for 0.66 BUSD and sold for 0.72 BUSD. For Bitcoin, one contract equals 0.001 BTC. You can find a more detailed specification of contracts here.

Order Placement.

The process of placing an order is quite simple. Go to the limit or market order and proceed from there.

Options type: Put or Call

Trade direction: Buy or Sell

Expiration: Select desired expiration date and click Next.

Select the desired number of contracts.

Select the strike.

And we choose the desired premium (i.e. the price at which we are willing to buy or sell the option). Then we choose how we pay the platform commission and place the order. That’s all.

Sellers of options on deltatheta must put up 100% collateral and earn simply for placing an order.

To ensure that each buyer of options on deltatheta that their purchased option will be settled at any price, sellers are required to put up 100% collateral in the order to sell.

For example, if the price of Bitcoin is currently 28,000 BUSD and one contract is equal to 0.001 BTC, then the seller of a call option for a strike price of 28,000 BUSD must put up 0.001 BTC or 28 BUSD for the seller of a put option, respectively.

This may be inconvenient and, in part, inefficient use of capital, but we guarantee 100% settlement for the buyer. As for the efficiency of working capital, here’s what it is.

When you place a limit order for sale and reach the moment of choosing how to pay the fee, you may notice the Liquidity Incentive Program.

By selecting this option, you authorize deltatheta to place your collateral on protocols like Venus (BSC), AAVE, and Compound (Ethereum). This means that when you place an order, you can stake your collateral while the order is pending and until it is either canceled or exercised as an option (i.e., not purchased, but actually exercised). It’s important to note that deltatheta does not charge any fees on your collateral, and any earnings you make will remain yours.

Our favorite part — our favorite competitors.

First of all, we would like to compare ourselves with the market leader — Deribit. Undoubtedly, today Deribit is the main platform to look to in terms of trading operations in the options market.

So, deltatheta vs Deribit.”

In our experience, 95% of our clients have accounts with both Deribit and us. However, they prefer to sell options on deltatheta (selling 10–15 delta) because the premium is paid immediately and in stablecoins, while on Deribit, they buy options and trade more complex strategies than just selling an option.

Deltatheta vs. Option Protocols.

Looking at Defillama, among the options protocols we have chosen Lyra.

Since on deltatheta we have limit orders and if we are talking about Ethereum and Bitcoin, we quote “like Deribit”, usually. At the same moment, we took 3 screenshots.

Lyra prices.

Deribit prices.

deltatheta prices.

Deltatheta vs. options vault.

In the traditional world, the solution to an options vault is called a structured product. The user places funds in the chosen strategy and expects to receive a return. Let’s consider one of the most liquid strategies on Ribbon Finance — selling an Ethereum call option through this vault. The algorithm of the strategy is as follows: every Friday, you deposit funds that are placed on the vault, then Ribbon goes to Opyn, where it mints options as an ERC-20 contract, after which this option is sold through Paradigm to participants such as QCR Capital, Bastion Trading, etc. (centralized cryptocurrency market participants).

The client pays a 2% annualized management fee for using this strategy and a 10% success fee.

Let’s take a look at the last sold vault.

This means that a weekly call options on Ethereum with a strike price of 2150 and a premium of 0.00339978 ETH was sold.

On April 21st, the premium fluctuated between 0.0035 ETH and 0.0033 ETH, which looks very good when selling this vault. If you trade options, you may find the following protocol comparison useful.

We classify Ribbon Finance as a hybrid system because although there is blockchain at the vault level, the actual trades occur through a decentralized intermediary in the form of Paradigm.

Ultimately, if you have an understanding of options, it is trading protocols that provide you with unlimited potential to implement your strategies. Working with vaults carries risks associated with the fact that you cannot exit the strategy.

--

--

delta.theta

A Decentralized Options Order Book Trading Platform