Opyn is a decentralized insurance platform built on Ethereum that allows users to protect themselves from the unique risks they face in DeFi. Opyn is built using Convexity Protocol (convexity.opyn.co), a generalizable options protocol that allows DeFi users to create put and call options. Anyone can buy options (oTokens) to protect themselves against DeFi risks. Users can also deposit collateral in a vault to mint and sell oTokens, earning premiums for protecting others. Opyn currently allows users to insure Compound deposits and hedging user's ETH downside with protective put options on ETH. Opyn's smart contracts have been audited by OpenZeppelin. If you have any additional questions not covered below, or want to learn more, join the Opyn Discord or email us at email@example.com.
ETH protection allowing you to protect yourself against ETH drawdowns, flash crashes, and volatility
Protection for USDC and DAI deposits on Compound
Currently, oTokens are bought and sold using Uniswap, and pricing is determined by the market price of oTokens on Uniswap. Therefore, pricing is completely decentralized as it is market determined based on the supply and demand of oTokens at any given point in time.
Opyn’s ETH protection gives you the right to sell your ETH for the strike price at anytime, thus mitigating your downside. You can also sell your oTokens in the case of falling ETH price. This blog dives into further detail.
Opyn’s Compound insurance provides protection against a number of different risks:
Technical risks (eg. smart contracts hacks)
Financial risks (eg. liquidity crises)
Admin risks (eg. admin key compromise, governance vulnerabilities)
Opyn’s Compound protection does not protect against
Issues with Compound's ETH:USD oracle and Maker's ETH:USD oracle
Non-transferable ERC20 tokens
We are actively working on increasing the surface of risks we can cover for future iterations of the protocol.
If ETH is below the strike price you purchased your protection at you can exercise at anytime to receive that strike price amount per USDC. For example if you purchased a put option with a strike price of $150, if ETH is below $150, exercise to receive 150 USDC per ETH. You could also choose to sell your oETH instead of exercising. This blog dives into further detail about selling vs. exercising.
If there is an issue with your Compound deposit, you can make a claim at any time to receive immediate payout.Here’s what’s automatically happening in the background:
a. You are sending your USDC/DAI on Compound, which is no longer worth it’s full value due to the hack / financial crisis, to the protocol b. You are sending your insurance tokens back to the protocol
Receive a. You immediately receive your protection payout in ETH
Opyn is built as a two sided marketplace, so any individuals interested in putting down collateral and earning a premium can provide protection.
ETH protection is collateralized with USDC, and each oETH is fully collateralized.
Compound protection is collateralized with ETH, and these positions are overcollateralized with the minimum collateralization ratio of 140%, meaning that there is at least $1.40 locked up for each $1 of insurance coverage.
The "max loss" is the maximum loss you can face on the position that you are covering. The rest is covered by your policy. For example, if you are insuring 1000 DAI and the Max Loss is 20 DAI, then in the case of an adverse event if you max a claim, you will receive $980 of ETH.
ETH Put Options You can earn premiums by selling protective put options on ETH. You are putting down USDC collateral and then minting oTokens (options). You can then sell your oTokens on Uniswap and immediately earn a premium.
Compound Protection You can earn ETH premiums by providing protection. In the background, you are supplying ETH as collateral and then minting oTokens (insurance tokens). Then you have have two possibilities to earn money on their ETH. They can either sell oTokens to protection buyers on Uniswap and earn premiums or add oTokens to the Uniswap Pool and earn transaction fees from other users' trading activity.
When you sell ETH put options, you immediately earn a premium. If ETH hits the strike price, you may be exercised on in which case you give up your USDC collateral to option buyers and receive the option buyers’ ETH in return. If ETH does not hit the strike price, then upon expiry you can remove your USDC collateral, keeping all of your collateral in addition to the premium you earned. You can also close out your position by buying back and burning the amount of oETH you sold.
Selling oTokens on Uniswap: Selling oTokens to protection buyers on Uniswap allows you to earn premiums on your ETH that far outshine anything you can get currently in DeFi (currently 0.01% on Compound, 0.05% on dYdX), and you will get the entirety of it back as long as you remain above 1.4x collateralized for Compound positions (otherwise you are at risk of liquidation) and there isn’t some disaster event (eg. technical risk like a hack, financial risk like DAI breaking its peg or a run on Compound). Here you’re taking a similar risk to depositing ETH on Compound, where you earn 0.01% and are exposed to Compound risk. With Opyn, you are exposed to Compound risk and Opyn risk, but earn a significantly higher premium on ETH.
ETH If the option buyer exercises, you could lose some or all of your USDC collateral. However you would receive the option buyer’s ETH in return.
Compound You can currently provide protection for the following on Compound:
USDC on Compound (cUSDC) - exposing you to USDC, Compound, and Opyn risk
DAI on Compound (cDAI) - exposing you to Maker, Compound, and Opyn risk.
In the case that there is an adverse event affecting the protocols you are exposed to, you may lose some or all of your collateral.
For providing Compound protection you are required to maintain a minimum collateral ratio of 140%. If you fall below this threshold, you are at risk of liquidation. For providing ETH protection you are not at risk of liquidation since you are collateralizing in USDC.
Yes, you can check out Opyn's example liquidator bot here.
You can close your position at any time by buying back the oTokens you had sold on Uniswap and returning them to your vault, which would allow you to redeem your collateral (ETH for providing Compound protection, USDC for selling ETH puts). One note is that the price of oTokens could have increased or decreased in the time since you first purchased them.
In the case of an adverse event, protection buyers can make a claim by sending their oTokens and protected asset to the protocol. Protection providers then pay out protection buyers in the collateral they put down and receive the protected asset. For ETH put options
Protection buyer exercises by sending ETH and oETH to the protocol
Protection seller gives up USDC collateral and receives protection buyer’s ETH
For Compound protection
Protection buyer claims by sending cDAI or cUSDC and ocDAI or ocUSDC to the protocol
Protection seller gives up ETH collateral and receives protection buyer’s cDAI or cUSDC
Yes! You can allow your users to access Compound deposit insurance or ETH protection directly through your DApp by integrating with the protocol. You can explore the documentation here and chat with us on Discord :)
Absolutely! The Opyn Convexity protocol is an open protocol that allows anyone to create oTokens and interfaces on top. We encourage the community to bootstrap markets and interfaces. You can get started with bootstrapping your own marketplace here and chat with us on Discord :) As an example, the iearn.finance team created a market for y.curve.fi (oCRV) and they host that interface as well.
The Convexity Protocol is the first generalizable, on-chain options protocol on Ethereum. Opyn provides insurance using the Convexity Protocol's protective put options. You can access the convexity protocol whitepaper at convexity.opyn.co and can access the smart contracts here.
Yes! Here's a list of some ideas. We are excited to see the all the different applications people will explore with on-chain options. You can find the documentation here and chat with us on Discord :)
oTokens are ERC20 tokens that represent the insurance (protective put option) that you have bought or sold. Each oToken corresponds to one unit of the insured asset. Eg. 1 ocUSDC protects 1 cUSDC, 1 oETH protects 1 ETH
ETH Protection: You can find all the ETH put options available along with their strike prices and expiries, here.
We initially launched with ocDAI and ocUSDC. However, the parameters of ocDAI contract we initially launched with resulted in market prices for insurance of around 10%+, which is too expensive to fulfill the needs of insurance buyers. To mitigate this, we launched an ocDAI contract with adjusted parameters, which has led to rates for insurance of around 2-4% for ocDAI. Specifically, the original strike price for the first ocDAI contract was $0.985 in terms of DAI ($0.02 in terms of cDAI), however DAI often fluctuates to $0.985 without there being an adverse event, making these contracts prohibitively expensive for insurance buyers. The strike price for the second ocDAI contract is $0.92 ($0.01859 in terms of cDAI) which gives insurance buyers comprehensive coverage against adverse events with Maker and Compound at a reasonable premium.If you purchased insurance on the old ocDAI contract you do not need to take any action. You are still protected.
The security of the Opyn protocol is our highest priority. We understand that especially since we ourselves are a smart contract platform, security is paramount. Our team has created a protocol that we believe is safe and dependable, and has been audited by OpenZeppelin. All smart contract code is publicly verifiable. You can find the OpenZeppelin audit report here and you can find our bug bounty here.
We recognize that this is a risk, and we have taken precautions to protect against this risk with rigorous internal testing and external audits. Even with this risk, you can still gain significant safety from Opyn protection. With Opyn protection, you can only lose your Compound deposits in the case that both Opyn and Compound are compromised at the same time. For example, if the probability that Opyn is compromised is 1% and the probability that Compound is compromised is 1%, then with Opyn insurance, your risk of losing your funds drops to 0.01%.
Opyn currently uses Compound’s ETH:USD oracle for ETH collateralized markets (Compound protection). USDC collateralized markets (ETH put options) do not use any oracles.
There is currently a protocol admin, but our goal is to remove the protocol admin and become fully decentralized.The admin can update option parameters within specific bounds that limit its control (eg. cannot lower minimum collateralization ratio below 100%), manage the asset whitelist, and set the name / symbol of tokens.The admin CANNOT access any user funds - Opyn is completely noncustodial.
Opyn’s smart contracts are on the Ethereum blockchain and are thus always available. If Metamask, or the Opyn interface are unavailable, you can always access Opyn through the smart contracts.
We currently release new at the money ETH protective put options with two week expiries each week. We also post a bi-weekly poll on our discord where the community can vote on more experimental oTokens to launch. We will be supporting this schedule for the next quarter.
DeFi rate made a great tutorial on how to buy and sell ETH protective put options using opyn.co, which you can find here.
Here are some great resources to learn more about options!
There are also lots of great conversations on our discord, and we’re happy to answer any questions :)