Perpetual Options and Non-Fungible Finance
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TLDR below. This is not financial advice.
Antimatter powers an ecosystem of on-chain financial products like Perpetual Options and Non-Fungible Finance (Connecting DeFi with NFT’s). In traditional options, you always have an expiration but in Antimatter there is no expiration. Antimatter also believes that the real use-case for NFTs lies in wrapping and packaging financial products. We will explore and learn more about Antimatter in this Article.
How does antimatter come into the perspective of what options do?
Leverage token was created by FTX first and then Binance also created leveraged tokens like bull and bear functions where you can 3x your bet depending on whether it’s a bull market or a bear market. That worked out relatively well because it gave people leverage but at the end of the day it was still on the centralised exchange. We don’t really have that many derivatives in the DeFi space so the leverage that you get is still very basic. Then, DeFi was still peaking and starting up so we didn’t have that kind of tools available and this is where antimatter comes in and solves that.
What are Perpetual Options?
Perpetual option is a derivative and just means that you have the option to buy or sell a specific underlying asset like let’s say ETH. You can have a call option which is to buy at a certain price or a put option to sell ETH at a certain price and this is something that we see in traditional finance, Binance, and FTX. The difference now is that in traditional options you always have an expiration whereas with Antimatter there is no expiration. This is a very unique product that you don’t have anywhere except at Antimatter right now.
What are Perpetual Futures?
Perpetual futures are the assets like ETH and there’s no expiration so basically, futures instead of options is really a derivative. You have more capital efficiency with options and with futures, it’s the entire underlying asset itself.
How are perpetual options different from perpetual futures?
In the case of perpetual options, you don’t need the entire underlying asset but only a certain amount which if you want gives more exposure to the market. Another big difference is that for perpetual futures it requires over-leveraged underlying assets but for perpetual options, the underlying assets are essentially not half a half with a certain underlying asset ratio. For example, you have one target asset and one stable coin underlying so you don’t need the whole backup and have more exposure and that’s the main reason and the main feature for perpetual options.
What is the counterparty in perpetual options?
In the new model, it is not required that if you have a call there has to be a put. Everyone can be holding a call and no one holding the put token. The difference is that essentially as more and more people hold the call token, the price will go up and then there will be arbitrage opportunities and people can redeem their call and sell the Ethereum underlying and get immediate profit.
There isn’t a long or short in the model but there are two counterparties. When you generate more put there will be more USDT in the underlying and when you generate more call there will be more Ethereum but the two parties share the same pool. The arbitragers will help to remove the counterparty forces through immediate profit-making. This is way easier because we no longer talk about long or short.
Virtual AMM vs Antimatter’s New Model
The difference between the new model that Antimatter has created against the virtual AMM’s is that instead of the invariant being the sum of assets, the assets in the pool like USDT versus ETH can fluctuate widely depending on the price of the underlying and Antimatter also created their own mathematical model and are standardising a bit more of the ratio of calls and put instead of the sum of assets in their liquidity pool.
Another product that Antimatter launched recently is financial NFT’s. NFT’s are huge and financial entities just intuitively make sense because if you are tokenising a specific position or tokenising a specific kind of portfolio that’s where the NFT comes in.
What are financial NFT’s?
If we look at it from a very fundamental level it’s basically a container. In the financial space when you say something is a container you can link to two things one is a basket for assets and the other is trenching your asset into different categories and that’s how NFT can be valuable in financial space because we do see a lot of basket assets like ETF’s trading in the traditional market. NFT is even better because you can insert your real asset into this NFT and it is like a certificate for the underlying asset and that’s why Antimatter did a very simple experiment and launched a platform which is the ETF’s for the spot.
Where does the native token come in and how does it help boost up the value of the entire protocol?
In the traditional economic aspect, tokens can serve two things. First is it can be a payment of transaction within your system and the second is improving your user loyalty because when you have users holding the token it can create a more long-term solid user base.
Antimatter is building this staking model that has two pieces. One is staking for service which is basically that in the future you have to stake some tokens for your options market and for normal users you can stake to accrue the network fees and both of these are non-inflationary. The inflation will come in when the product is working and when the governance style is fully in place.
Antimatter does not rely on oracles. The pricing will be maintained by the arbitragers. The protocol focuses very much on allowing you to create a perpetual options position of the underlying and then the secondary market is where arbitrage comes in to level up the prices and so they don’t need to rely on oracle but just on basic economic incentives for people to come in and make profits and help to level out the price difference.
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Antimatter powers an ecosystem of on-chain financial products like Perpetual Options and Non-Fungible Finance (Connecting DeFi with NFT’s). Perpetual option is a derivative and just means that you have the option to buy or sell a specific underlying asset. You can have a call option which is to buy at a certain price or a put option to sell at a certain price. In traditional options you always have an expiration but in Antimatter there is no expiration.