(CoinDesk Analysis Team)
Singapore – Decentralized finance (DeFi) protocol Ribbon Finance, known for its on-chain structured products, said it is launching an options exchange to boost demand for its services among savvy crypto traders.
Announced at Token 2049 in Singapore, Aevo will allow users to initially trade ether (ETH) options, with plans to launch options for Bitcoin (BTC) and other tokens in the coming months.
Ribbon founder Julian Koh said he expected the options exchange to see over $100 million in daily trading volume in the next few months, adding that the Ethereum ecosystem had “gained momentum” after the Merge event earlier this month.
“With the majority of TVL in our platform coming from the Ethereum ecosystem, we have always regarded it as our home ground, and have strategically launched Aevo while the Ethereum network continues to build momentum after the Merge,” Koh told CoinDesk, using an acronym for total value locked, or the amount of crypto tied up in DeFi projects.
Ribbon locked over $75 million worth of various cryptocurrencies as of Wednesday. At its peak, in May, It held over $300 million, though the value of assets held on its platform fell as the broader market declined.
Ribbon is known in crypto circles for its Decentralized Option Vaults (DOV) product, which allows users to generate yield through different strategies that involve financial instruments such as options, derivatives and other fixed-rate crypto products.
The DOV for USD Coin (USDC) on Ribbon pays some 25% in annual yields to users, compared with rates of less than 4% on lending protocols like Aave or Compound.
Crypto options trading has been a rare bright spot in the bear market, building momentum even as crypto prices have plunged, as previously reported. Some $10 billion worth of options products has been traded so far in September, data show.
Earlier this year, fund manager Darius Sit of QCP Capital called options trading the next growth driver in the crypto sector, explaining at the time that such products were much more familiar to institutional investors and that they were much more likely to use options rather than niche DeFi products to trade cryptocurrencies.