Dopex app review
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Solidified Solidity Finance
Solidified Solidity Finance
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Last updated: Nov 22, 2022
Dopex (Decentralized Options Exchange) is a decentralized options protocol with an aim to maximize liquidity and minimize losses for option writers while maximizing gains for option buyers. This happens in a passive manner for liquidity contributing participants.
The Dopex platform went live officially in Q3 2021 on Ethereum, yet it launched on Arbitrum after it went live in order to mitigate gas fees and transaction times and later was released on BNB Chain and Avalanche’s C-Chain.
Using the Black-Scholes formula, Dopex calculates the cost of options and passes it through a function to determine the volatility smiles based on the realized volatility of the asset.
Dopex allows its users to purchase and swap options with any strike price and thanks to its model provide more realistic and fair pricing through discounted options with instant arbitrage opportunities. The rDPX rebate token minimizes losses and offsets risk for liquidity providers to option pools which can earn the DPX governance token as rewards. Since all options on Dopex have collateral to back them and eliminate the risk of third-party defaults, users can mint synthetic assets using rDPX.
The project aims to offer the best services to both retail users looking to access yield opportunities and seasoned options traders looking to hedge or speculate. Dopex strives to have the best-priced options in the crypto space with pooled liquidity that could possibly rival centralized exchanges.
With the support of delegates and early investors who channel billions of dollars in option and derivatives volume, Dopex allows an ideal experience in the yield-hungry DeFi environment.
Users can add liquidity to option pools on the Dopex app using base (WETH, WBTC, or other currencies) and quote (stablecoins) assets. With the end of each epoch – weekly or monthly, the assets are rolled over into the next epoch, allowing for passive liquidity providing for option sellers. Collected premiums are rolled over into the base or quote assets for the next epoch, and liquidity is reset.
All fees Dopex collects are distributed to DPX token holders at the end of weekly epochs. Currently, the Dopex app can be accessed with wallets such as MetaMask and Coinbase Wallet. Dopex wallet support also includes all crypto wallets integrating the wallet connect protocol.
There are two tokens utilized to coordinate new ecosystem dynamics in a synergistic feedback loop. DPX is the limited supply governance token that accumulates fees and revenue over time from pools, vaults, and wrappers. rDPX is a rebate token for option writers which gives Dopex a unique edge with incentives for its users such as DPX farming. In the long run, rDPX will be used as a fee required for future contracts, currently, it can be utilized as collateral to mint synths applicable in the creation of synthetic options for non-crypto assets.
The total supply of DPX is capped at 500,000 and is divided into five batches. The first one takes 17% of the tokens for operational allocation distributed across five years to initially handle governance, incentivize the development of community suggestions and help grow the platform with newer features. The second consists of 15% from the supply and is allocated to farming (liquidity mining). 30% go for platform rewards and are expected to be distributed over a period of approximately five years, to incentivize the use and upkeep of the Dopex platform. The founders keep 12%, 20% of which are initially staked in liquidity pools and 80% are vested for two years, distributed using a drip system via a smart contract. 26% of the total supply gets divided between early investors – 11% with 50% vested over six months, and token sale – 15%.
rDPX is a token minted and distributed for any losses incurred by pool participants. The amount being minted is determined based on the net value of losses at the end of a pool’s epoch. The token has no cap supply but there is a mechanism in place to avoid it from being valueless. It is a fee requirement for future additions to Dopex such as vaults. It would be used as collateral to borrow funds from Margin to leverage option positions, and used as collateral to mint synthetic assets. Staking rDPX will boost fee accrual. However, due to no emission curve set initially, scarcity may prevail initially if purchasers aren’t net profitable. In the future, the emission mechanism could be changed via governance votes.
The Dopex team keeps its anonymity but the main developers are @tztokchad, who also is the one to come up with the idea for the platform, and @witherblock. The two started working together in late 2020 on the third iteration of Dopex. However, tztokchad has been working on the project since 2019 after having been launching Ethereum-based products anonymously since late 2016.
@tztokchad and @witherblock held a Team Q&A with some of the members of the project split into two parts that can be found here and here.
Dopex audits can be found in the protocol dashboard on this webpage.
The list of investors in Dopex starts with Orthogonal Trading, LedgerPrime, and OrcaTraders. The first two companies specialize in investing in digital assets whereas OrcaTraders has over 30 years of experience in the trading field.
Since the launch of the project is still rather fresh, the possibility to buy DPX tokens in exchange for ETH via the deposit contract and become one of the early investors in the platform is still ongoing.
Dopex’s DPX and rDPX tokens can currently be found on Sushiswap (On Arbitrum).
The Dopex roadmap for 2022 consists of plans to focus on the development and implementation of option strategy vaults and insured stablecoin pools.
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