Sep 10, 2021
Rock’n’Block Developed a New DeFi Options Platform
The developers of Rocknblock were tasked with customizing a smart contract for a decentralized Ethereum options platform in the shortest possible time. Such a service uses an automated market maker to create liquidity and reduce user costs.
The platform is designed to automatically manage liquidity on Uniswap V3, it took our team 1.5 weeks, with expert knowledge of blockchain developers on Solidity and the intricacies of Uniswap V3.
The creators of the highly experimental decentralized options platform will soon announce the launch of the main network, promising users an innovative way to trade ETH option contracts. The developers on our side guarantee the reliability and security of the code.
How it works for users
An automated market maker creates liquid options on the blockchain. By applying the predictive market valuation rule to the world of options, a new model for option creation, pricing, trading, and settlement becomes available to users.
In traditional finance, options are contracts that give buyers the right, but not the obligation, to buy assets at a certain price at a set time in the future, for which they pay sellers a “ bonus. In our custom case, so far the only asset currently supported is ETH.
How it works on the technical side
The service offers vaults of popular Liquidity Pools. Selecting WETH/USDC pair, let’s suppose we can enter the two maximum amounts of the machine pool within the current price range as ETH and USDC.
Vault’s job is to first withdraw all liquidity, and then drop % ETH,
A basic order consisting of USDC and a limit/rebalancing order consisting of ETH and USDC.
The function of price limit/rebalancing orders is to avoid direct swapping (converting 20% ETH to 20% USDC). Doing so will result in a transaction fee of 0.1~1% being charged. Instead, swapping occurs naturally by providing liquidity. In this way, it does not cost a penny for handling fees, and even transaction fees can be earned. This is the reason for the “passive” rebalancing mechanism.
To put it plainly, the scanner rotates and catches transactions in the mempool. According to the conditions specified by the code, the service sets up a transaction for a high purchase on Uniswap and overtakes it with more gas. Because of this, the price jumps, and the user is left at a profit from the liquidity provided.
What’s different from similar services
According to the statement, several key features set our client apart from similar platforms. For example, prices are determined solely by supply and demand, so the market maker does not rely on external oracles to determine prices. In addition, users can sell their options before they expire.
Unlike the famous similar service Charm Finance, our customers have eliminated the problem of rebalancing once every 12 hours, using a binding not by time, but only commands from the backend.
Re-balance feature
Our developers have carefully studied the power and added a re-balance function. Now the new service automatically recalculates the boundaries of liquidity ranges. Then a command comes to the backend and liquidity is reloaded in the updated equivalent, i.e. liquidity pools are always in wide ranges.
A few more important tweaks: there are several liquidity vaults to choose from and they are proven pools of tokens in circulation. The backend working code is responsible for ensuring that the pools’ liquidity ranges are respected correctly.
Rock’n’Block smart contract development
The smart contract developed by the Rock’n’Block team is currently undergoing a third-party audit. As soon as it successfully passes, we will be able to share the details of this project.
We can only add that as always our smart contracts are open source and validated on the scanner, in this case, it passed the Etherscan validation and verification.
Out of respect for our customers’ releases, we do not disclose project names. But we want to share the successful stages of development, so we will tell the technical details here sometimes anonymously.
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