Charm Finance – the decentralized options protocol – has launched their mainnet and users can start trading immediately. However, the contracts are still unaudited so proceed with caution.
The Charm Finance team believes that their options protocol stands out from the rest as they have implemented a unique approach of splitting tokens into tokenized payoffs and using a prediction market AMM to create liquidity.
Doing so enables the following benefits:
- Price is purely determined by supply and demand, no reliance on external oracles
- Options can be sold any time before expiry
- Options can be shorted
- Low slippage
- Options that expire in the money are automatically exercised
- Positions are represented as ERC-20 tokens
To learn more about how this novel mechanism work, check out this in-depth post by the Charm team.
As part of a guarded launch, Charm is launching with a cap on total value lock on each of the markets that it supports. Currently, once the deposited amount reaches $100K the protocol will stop allowing additional deposits. New users will not be able to open additional positions until current users close theirs.
Charm Finance is offering cash-settled, European options during this initial launch. While there is no fee for closing your position or final settlement there is a 1% fee charged when users open a position. Chainlink oracles are still used for final settlement price as well.
Keep up with Charm by following their Twitter.