PancakeSwap, an decentralized exchange, has teamed up with Stryke (previously named Dopex) to launch a fresh initiative in the decentralized finance sector: CLAMM Options Trading. With this new venture, traders can now engage in options trading, establish on-chain options markets, collect premiums, and receive swap fees.
Through this collaboration, we’ll bring American-option CLAMMs to Arbitrum’s blockchain for the first time. These new options offer unparalleled adaptability, with adjustable expiration times ranging from one hour to 24 hours. Initially, traders and investors can explore markets for ARB/USDC, WETH/USDC, and WBTC/USDC pairs.
An option is a type of investment contract which allows buyers to have the choice, without being forced, to purchase or sell an underlying asset at a set price on or before a certain date. In exchange for this privilege, buyers pay a fee upfront, thereby capping their maximum loss at the amount paid if the market conditions turn against them.
Option contracts can be divided into two main types: call options and put options. A call option lets the buyer buy an asset at a specific price, called the strike price. On the other hand, a put option gives the buyer the ability to sell the asset at the strike price.
More on the CLAMM Protocol
During the exchange, it was made clearer how CLAMM’s liquidity procedure operates. When users add liquidity to CLAMM options, they are essentially contributing to PancakeSwap’s v3 (CLAMM) pool at the same time. This action benefits trading by enabling the extraction of liquidity from the v3 pool when someone purchases options. As a result, the provider of liquidity assumes the role of the options seller, earning a premium.
In simpler terms, excess unused funds in PancakeSwap v3 pools continue to earn potential trading fees if the pool price remains stable within a given range. The benefits of selling options and providing v3 liquidity are similar, making it a safer choice than traditional methods with minimal additional risks. The amount of tokens in the pool stays the same. However, there is a possibility that unutilized liquidity may build up if demand for options buying is low or if the liquidity sits idle without generating fees. Ultimately, PancakeSwap v3 effectively manages and utilizes liquidity for options trading.
In a recent post by Stryke, the advantages of the new project for PancakeSwap users are emphasized. With this newest update, users will be able to conveniently access CLAMM through PancakeSwap. Additionally, current platform users can enhance their liquidity by choosing PancakeSwap as their underlying Decentralized Exchange (DEX).
⚡Stryke integrates with @PancakeSwap
Users of PancakeSwap can now easily reach our CLAMM product through a interface they’re accustomed to, while current Stryke users will experience enhanced liquidity by opting for PancakeSwap as their preferred decentralized exchange.
Try it here:…
— Stryke ⚡ (@stryke_xyz) April 8, 2024
PancakeSwap’s Version 4 to Be Released This Year
A new project is underway, coming soon after the exchange platform’s declaration of the upcoming launch of PancakeSwap version 4. Anticipated later in the year, this update will introduce features like hooks, custom pool types, singleton, and flash accounting, enhancing on-chain trading by reducing costs and improving efficiency for users.
In addition, starting in the third quarter, the new edition will be accessible on both Ethereum and BNB Chains. This change brings about more affordable asset prices, less gas usage, and fewer deployment costs for users.
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2024-04-08 17:36