Introduction
Speculate, hedge or earn premiums from NFT Options
Background
However, this mode has some limitations. Firstly, it does not support put options, which restricts its use for hedging purposes. Secondly, with physical settlement, a trade completes with the transfer of the underlying NFT from the options seller to the buyer. It is simple and robust in some circumstances, but it is inefficient and risky for traders to realize their profits when compared to cash settlement due to a lack of liquidity in the NFT market. Thirdly, the tremendous gas cost on Ethereum mainnet has also become the main obstacle for the widespread adoption of the protocol.
Therefore, we built NFTCall Surge (V2) to address these limitations with a series of innovative solutions.
What is NFTCall Surge?
NFTCall Surge is an NFT options trading platform on Layer-2 that uses a peer-to-pool model and auto market making mechanism. It enables NFT investors to trade NFT options against liquidity pools, speculate or hedge against price fluctuations, while liquidity providers can earn premiums from auto market making.
Peer-to-pool model
Inspired by GMX, Gains Network and Lyra, we adopt the peer-to-pool model for cash-settled NFT options. The liquidity pool will automatically provides market-making services through an AMM model, allowing traders to purchase both call and put options against the liquidity pool.
Cash-settled NFT Options
Compared to NFT-settled options, NFTCall’s cash-settled NFT options create a more flexible trading experience without royalties and provide lower entry barriers for traders who are interested in gaining exposure to NFT price fluctuations.
Auto market making
NFTCall AMM is the foundation for the peer-to-pool model options market. The core mechanism of the AMM is to increase the cost of NFT options when the demand for options is high and decrease it when the supply is high. By taking this approach, the AMM can reach a market-clearing value for NFT options with any strike and expiry, and effectively manage the risks associated with options trading for LPs.
Why trade NFT options on NFTCall Surge?
With the peer-to-pool model and auto market making mechanism, NFTCall will fully unleash the power of NFT options, benefiting traders and liquidity providers in the following use cases:
Speculation: Speculating on the future price trend of an NFT collection can be profitable regardless of whether the floor price rises, falls, or fluctuates within a range.
Hedging: NFT holders can use NFT options to hedge against the risk of a drop in NFT prices.
Yield: Liquidity providers deposit liquidity into the vault as option sellers and use NFT options to generate income or revenue.
Leverage: Options have similar market exposure to owning an NFT, but require less money, providing more leverage and flexibility for investment portfolios, especially for high-priced blue-chip NFTs.
Available on popular Layer-2 networks
To enhance the trading experience, NFTCall Surge will be deployed on Arbitrum and ZkSync Era to achieve faster transaction speeds and lower gas costs, more importantly, to embrace the rapidly growing ecosystem of Layer-2.
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