In the DeFi derivatives track, the on-chain perpetual contract ecosystem is developing in full swing, while on-chain options products are relatively lagging behind. In March of this year, the DeFi options protocol Opyn announced its transformation into a perpetual DEX protocol.
The share of on-chain options protocols in the cryptocurrency market is much smaller than that of Dapps that specialize in trading and lending. However, considering that options products are one of the indispensable derivative tools in traditional finance, and with the approval of Bitcoin spot ETFs, the mainstream level of the crypto market has increased, and the professionalism of crypto market traders and market makers has increased, there is still a lot of room for value-added in the future for on-chain options products.
Recently, Thetanuts Finance, which ranks first in TVL of DeFiLlama options protocol, announced the launch of its governance token. This on-chain product, which has been deeply engaged in options since 2021, has proved to the market in many aspects such as capital efficiency, transaction costs and user experience that options products are an important part of DeFi.
V3 is online. What is Thetanuts Finance?
Thetanuts Finance is a decentralized multi-chain options protocol focusing on Altcoin options, allowing users to long or short on-chain options. Due to the rise of EigenLayer, Thetanuts also followed the market and launched options products with LRT and LST as the underlying assets.
In September 2021, Thetanuts launched Basic Vaults, enabling users to sell OTM Europaen cash-settled options to approved market makers; in June 2022, it launched Thetanuts Finance Stronghold, an index product that aggregates multiple basic vaults; in January 2023, it launched multiple products including Long Vaults (buy-side vaults), Degen Vaults (exotic vaults), and Wheel Vaults (European physical settlement vaults); in November 2023, it launched the Thetanuts Finance v3 Incentivized Alpha version.
During this period, Thetanuts received two rounds of financing, with a luxurious background. In March 2022, it completed a seed round of financing of US$18 million, led by Three Arrows Capital, Deribit, QCP Capital and Jump Crypto; in April 2023, it completed a financing of US$17 million, led by Polychain Capital, Hyperchain Capital and Magnus Capital.
Steady progress step by step has also allowed Thetanuts to achieve the current No. 1 ranking in the TVL of DeFiLlama options protocol. According to the official website of Thetanuts, Thetanuts Finance currently has more than 60,000 total users, the TVL of the protocol has reached 31.07 million US dollars, and multi-chain deployment has been deployed to 9 networks. As for the options protocol, Thetanuts also set a record high in total nominal sales in 2024. According to official statements, Thetanuts has had more than 100,000 interactions in activities of Galxe, Layer3 and Zealy.
In the first quarter of 2024, Thetanuts Finance's v3 mainnet was launched, marking the transformation of Thetanuts Finance from an options vault protocol to a decentralized on-chain options protocol focusing on Altcoin, supporting users to conduct long and short operations.
The Thetanuts v3 architecture will adopt existing Basic Vaults, lending markets, and Uniswap v3 pools, and will also adopt free market pricing - users can express their views on pricing.
NUTS Token Economics
In May, Thetanuts Finance announced the launch of the ecosystem’s governance token $NUTS to promote the long-term goals of the protocol, including decentralization, governance, and incentive mechanisms.
The maximum supply of NUTS is 10 billion, and the initial circulation supply accounts for about 7.5%. The token distribution is as follows:
・Community: 43.5%
・Investors: 11.9%
・Team: 20%
・National Treasury: 20.1%
・Airdrop Season 1: 3.0%
・Public offering: 1.0%
・Initial liquidity: 0.5%
Thetanuts Finance refers to Curve's vote-escrow model. Liquidity incentives will be issued on the Ethereum mainnet in the form of $veNUTS at the end of each Epoch and can be used after receipt.
NUTS can be pledged as veNUTS at a ratio of 1:1, and then can be linearly unlocked into liquid $NUTS within a period of 90 days. $veNUTS holders can enjoy the privileges of Thetanuts Finance community members and participate in weighted voting of various components within the Thetanuts Finance ecosystem. Holders can further lock $veNUTS to obtain up to 1.5 times the liquidity incentive accelerated emission on Thetanuts Finance.
The fees collected by Thetanuts Finance will be accumulated in the protocol treasury and will be managed by the Thetanuts Finance DAO after the governance function is launched.
How to use Thetanuts to maximize your profits
Borrowing
The v3 lending market is the core module in Thetanuts Finance v3. Its contract is inspired by Aave v2, enabling users to long or short on-chain options. Supported assets include $XYZ-C, $XYZ-P, $XYZ and USDC assets.
In addition, Thetanuts also supports flash loans. Similar to Aave v2, the lending market will enable flash loans, and users can borrow up to 95% LTV, which means that the leverage limit for long positions is theoretically 20 times.
Once a user opens a short call or short put position, the system will prompt the user to Boost and deposit Basic Vault LP tokens into the lending market. By providing liquidity on the lending market, lenders generate income in the form of lending interest.
Lenders on the lending market can borrow against their position collateral, borrowing $XYZ or $USDC based on the pool of funds they provide. This enables users to achieve greater capital efficiency on their short position trading collateral and allows them to interact with other components of the Thetanuts Finance v3 ecosystem using capital borrowed from the lending market.
LRT Strategy Vault
In March this year, Thetanuts Finance v3 also launched the LRT Strategy Vault, integrating Pendle's PT-eETH product and creating a leveraged LRT strategy vault on the Ethereum mainnet, allowing users to earn additional returns on their LRT assets. These include PT-weETH, PT-USDe and other option vaults.
Taking PT weETH as an example, on the Thetanuts user interface, users will "Zap" their PT weETH. PT weETH is deposited into the Thetanuts v3 lending market, and ETH is borrowed, and ETH is deposited into the ETH-C basic vault, generating additional basic vault option fees.
Through the LRT Strategy Vault, users can generate up to 3 sources of income, including PT weETH fixed income, Thetanuts' ETH-C Basic Vaults option premium, and NUTS token rewards.
Get more benefits
In addition to utilizing the lending market and LRT strategy vault, users can also earn income by adding liquidity.
LPs added to the liquidity module will be entitled to Basic Vaults’ option fees, lending interest in the lending market, AMM’s transaction fees, potential NUTS token incentives, and potential additional token incentives.
Thetanuts Finance is an option product under the Vaults model, that is, the option seller deposits the collateral into a vault and mints an ERC-20 token representing the option rights according to a certain collateral ratio. Holding the token is deemed to have the rights of the option buyer, and the option will be automatically exercised or expired upon expiration.
As a representative project for issuing structured products, Thetanuts has traditionally been seller-centric in its strategies, but after v3, it also supports buyer strategies. By using AMM and lending markets, LPs and traders can choose to long or short on-chain options.
With AMM, users can also close their positions immediately, unlike before when they had to wait for the next epoch to end before LP could exit their positions. In addition, Thetanuts v3 simplifies the user interface, abstracts various transaction functions such as Basic Vault and lending, simplifies the interactive experience, and greatly improves the user experience.
After the launch of NUTS tokens, Thetanuts will also launch the DAO governance model to take its decentralization a step further. As the leading on-chain options protocol today, Thetanuts has achieved some results, but how to bring options to more traders and make profits is a long-term endeavor.
Welcome to BlockBeats the BlockBeats official community:
Telegram subscription group: https://t.me/theblockbeats
Telegram group: https://t.me/BlockBeats_App
Twitter Official Account: https://twitter.com/BlockBeatsAsia
