Opyn - how invest, sell, buy, create
What is Defi and how does it work?
DeFi, short for decentralized finance, is a generic term for a group of financial instruments built on the blockchain.
The idea is to allow anyone with Internet access to lend, borrow and go to the bank without intermediaries.
In recent years, DeFi has been one of the fastest growing areas of blockchain and decentralized web space.
Collectively, DeFi apps are financial products that run on a public blockchain like Ethereum. These products do not require permissions, they do not use third parties. Instead of financial intermediaries such as brokers and banks, everything is automated in the protocol using smart contracts.
Do you want to take out a loan? You don't need the bank to transfer money to you. You can get a loan directly from your colleagues. Ready to bet on Bitcoin futures and other derivatives? Forget about finding a bookmaker. You can let the protocol handle this. Do you want to exchange one asset for another? Decentralized exchanges can facilitate transactions without huge costs.
DeFi apps first appeared on Ethereum, which was invented by Vitalik Buterin. Since then, they have spread to other networks that use smart contracts to automate transactions. These include Solana, Binance Smart Chain, and Avalanche.
DeFi uses a variety of technologies developed in the blockchain space. They all find applications outside of decentralized finance, but play an important role in the DeFi ecosystem.
According to a joint study by Wharton Blockchain and Digital Asset and the World Economic Forum, there are several components of what DeFi is:
- First of all, DeFi projects are blockchains, distributed ledgers for recording transactions. Most DeFi services currently run on the Ethereum network due to its capabilities and popularity among developers. However, DeFi activity is also on the rise in other blockchains.
- Next are digital assets, i.e. DeFi tokens, which represent value that can be sold or transferred on the blockchain network. “Bitcoin and other cryptocurrencies were the first blockchain-based digital assets. Others have a range of functions that go beyond payments, ”the study notes.
- The next component is wallets: software user interfaces for managing assets stored on the blockchain. With a non-custodial wallet, the user has complete control over his funds through private keys. In the case of custodial wallets, the private keys are managed by the service provider.
- Another important block of the ecosystem is smart contracts. It is blockchain-based programming code that executes, controls and documents relevant events and actions in accordance with predefined conditions and rules.
- The next step is stablecoins (digital assets whose value is tied to a fiat currency, a basket of fiat currencies, or other assets with a stable value).
What is Opyn?
Opyn is an options platform built on top of Convexity, a universal option protocol on the Ethereum blockchain that allows users to create options using option tokens, or o-tokens (oToken).
What is Opyn in simple terms? Opyn.co - Offers an easy-to-use interface for buying and selling ETH put and call options.
The Opyn protocol entered the margin trading market in 2019, but evolved into a protection and insurance platform in February 2020. Users can purchase protection of their deposits at Compound.finance against technical and financial risks.
Opyn also launched protection options for ETH holders in March. These original o-tokens were ETH put options for which liquidity was provided through Uniswap. Hence, these products can be seen as insurance for DeFi users. That is, the Opyn protocol is more than just another protocol for speculation.
Put options work like insurance in traditional finance. A put option gives the buyer the right to sell a specific asset at a specified price on or before a specified date. This means that no matter how low the price of the asset, the investor has the right to sell the shares at the agreed price. Convexity uses put options to provide option buyers with insurance for their Dai and their Compound assets (Dai and USDC).
Convexity allows option sellers to earn premiums on their collateral and allows option buyers to protect themselves from the technical, financial and systemic risks in DeFi. These risks include break-ins, bank robbery, DeFi crisis, etc.
Currently, the Opyn protocol only supports ETH options. It should be noted that this is a new product in the DeFi market and it is in an active stage of its development. Therefore, in the future, the list of supported tools may be expanded.
What kind of options are available on Opyn?
On the platform, you can purchase put or call options for ETH.
How do I use Opyn?
How to use Opyn in South Africa? Everything is very simple, go to the main page of the project and press the "Trade SQUEETH" button. You will be redirected to a trading platform where you can create a put or call option.
How Opyn works?
We figured out how to use Opyn, now let's look at how Opyn works. It should be noted right away here that options are a specific derivative instrument and before you start working with them, you need to study the topic.
An option is a contract not for the purchase or sale itself, but for the right to buy or sell an asset at a fixed price at a certain point in the future. A buy option is called a call option, and a sell option is called a put option. They are also traded exclusively on the stock exchange.
The buyer of the option can at any time refuse the deal if it turns out to be unprofitable for him, but the seller does not. If the buyer of the option decides to exercise his right to buy or sell the asset at the guaranteed price, the seller of the option will be obliged to fulfill the contract. Therefore, options are sold only by experienced exchange players who are able to predict the future price of assets.
In fact, for the buyer, an option is an “insurance” against possible losses. If the transaction is canceled, he will simply lose the little money he paid for this "insurance" - the premium to the option seller.
How does Opyn work? When you buy an ETH put or call option on the platform, the underlying asset is ETH. Then a so-called oToken or an option version of this ETH is created with a strike price and expiration date.
How to start invest with Opyn in South Africa?
How to use Opyn in South Africa and do you need it? You need to work with the opyn protocol if you want to hedge your risks, but there are experienced traders who use options for speculation. To do this, you need to be well versed in options, to know the basic strategies that are used when speculating in options.
Opyn does not support all countries, but South Africa is not limited. You can get started without any problems and invest with Opyn.
Since Opyn is a DeFi platform, registration does not require the provision of personal information (mail, phone number, etc.). The connection is made through a cryptocurrency wallet. Once connected, you can use the platform.
If you do not know how to use Opyn in South Africa, carefully read the FAQ section on the main page of the site before using the platform.
Is it safe to invest with Opyn online?
As a rule, DeFi platforms provide a fairly high level of security, but even they are not immune from hacker attacks. In 2020, hackers found a vulnerability in the Opyn smart contract, which allowed the attacker to hide with crypto-assets in the amount of $371,000.
Opun uses "oTokens" or oETH for options, and in this case, the attacker performed a "double work" to enhance the security provided by the trafficker.
The attacker started with flash credits to buy oETH from Uniswap, then chose the ERC20 token, in this case USD Coin (USDC), as a seed and used it. The double pass made it possible to win the deposit.
The owners of the Opyn platform acknowledged this fact and returned all funds to the victims. As you can see, invest with Opyn carries a certain risk, although there is no more public information on the identification of new vulnerabilities in Opyn smart contracts.
How makes a deposit?
To invest with Opyn you need to fund your account. This is done very simply. On the platform, click the "connect wallet" button and you will be offered 4 connection methods:
Each of these methods allows you to connect your wallet to the Opyn platform.
Even if you didn't know before what is Opyn, how to use Opyn, you can easily connect your wallet to the platform and start invest with Opyn.
You don't need to withdraw money from the platform as it is DeFi. They always remain in your account and the platform or other third party does not have access to them. Profits from the use of options will be automatically credited to your wallet.