Forwarded the original title ‘空投在即，一文解读链上期权Thetanuts Finance’

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 this year, the DeFi options protocol Opyn announced its transformation into a perpetual DEX protocol.

The share of on-chain option protocols in the cryptocurrency market is much smaller than that of Dapps that specialize in trading and lending. However, considering that option products are one of the indispensable derivatives tools in traditional finance, and with the rise of Bitcoin With the passage of spot ETFs, the mainstreaming level of the crypto market has increased, and the professionalism of traders and market makers in the crypto market has increased, there is still a lot of room for value-added in the future of on-chain options products.

Recently, Thetanuts Finance, which ranks first in DeFiLlama options protocol TVL, announced the launch of governance tokens. This on-chain product, which has been deeply involved in options since 2021, has proven to the market in terms of capital efficiency, transaction costs and user experience. Options products It is an important part of DeFi.

V3 Launched, What is Thetanuts Finance?

Thetanuts Finance is a decentralized multi-chain option protocol focusing on altcoin options. It allows users to go long or short on on-chain options. With the rise of EigenLayer, Thetanuts has also launched options products with LRT and LST as the underlying assets, closely following the market.

In September 2021, Thetanuts launched Basic Vaults, allowing users to sell OTM Europaen cash-settled options to recognized 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 (buyer’s vaults), Degen Vaults (exotic vaults), and Wheel Vaults (European entity settlement vaults); in November 2023, the Thetanuts Finance v3 incentive Alpha version will be launched.

During this period, Thetanuts received a total of two rounds of financing, with a luxurious background. In March 2022, it completed a US$18 million seed round of financing, led by Three Arrows Capital, Deribit, QCP Capital and Jump Crypto; in April 2023, it completed a US$17 million financing, led by Polychain Capital, Hyperchain Capital and Magnus Capital.

Step by step, Thetanuts has achieved the number one ranking in DeFiLlama options protocol TVL. According to the official website of Thetanuts, Thetanuts Finance currently has more than 60,000 total users, a protocol TVL of US$31.07 million, and multi-chain deployment to 9 networks. And for options protocols, 2024 also saw Thetanuts hit an all-time high for total notional sales. According to officials, Thetanuts has had more than 100,000 interactions across Galxe, Layer3, and Zealy events.

In the first quarter of 2024, Thetanuts Finance’s v3 mainnet was launched, which marked the transformation of Thetanuts Finance from an options vault protocol to a decentralized on-chain options protocol focusing on altcoins, supporting users to conduct long and short operations.

The Thetanuts v3 architecture will leverage the existing Basic Vaults, lending markets, and Uniswap v3 pools, and will also feature free market pricing – where users can express their views on pricing.

NUTS Tokenomics

In May, Thetanuts Finance announced the launch of $NUTS, the ecosystem’s governance token, to be used to drive the protocol’s long-term goals, including decentralization, governance, and incentives.

The maximum supply of NUTS is 10 billion, accounting for approximately 7.5% of the initial circulating supply. Tokens are distributed as follows:

・Community: 43.5%

・Investors: 11.9%

・Team: 20%

・Treasury: 20.1%

・Airdrop Season 1: 3.0%

・Public sale: 1.0%

・Initial liquidity: 0.5%

Thetanuts Finance refers to Curve’s vote-escrow model. Liquidity incentives will be issued in the form of $veNUTS on the Ethereum main network at the end of each Epoch, and can be used after being claimed.

NUTS can be staked as veNUTS at a 1:1 ratio and can then be linearly unlocked into liquid $NUTS over a 90-day period. $veNUTS holders can enjoy various privileges of Thetanuts Finance community members and participate in weight voting of various components within the Thetanuts Finance ecosystem. Holders can further lock up $veNUTS to receive up to 1.5x liquidity incentives for accelerated emissions on Thetanuts Finance.

The fees collected by Thetanuts Finance will be accumulated into the protocol treasury, which will be managed by the Thetanuts Finance DAO after the governance function is activated.

How to maximize your profits with Thetanuts

Lending

The v3 lending market is a core module in Thetanuts Finance v3, with its contract inspired by Aave v2. This allows users to go long or short on-chain options, with supported assets including $XYZ-C, $XYZ-P, $XYZ, and USDC.

Furthermore, Thetanuts also supports flash loans. Similar to Aave v2, the lending market will enable flash loans, allowing users to borrow up to 95% LTV loans. This means that in theory, the leverage limit of long positions is up to 20 X.

After users open short call options or short put option positions, the system will prompt users to Boost, depositing Basic Vault LP tokens into the lending market. By providing liquidity in the lending market, lenders generate income in the form of loan interest.

Lenders in the lending market can use their positions as collateral for loans, borrowing $XYZ or $USDC based on the pool of funds they provide. This enables users to achieve higher capital efficiency on the collateral of their short positions and allows them to interact with other components of the Thetanuts Finance v3 ecosystem using the capital borrowed from the lending market.

LRT Strategy Valut

In March of this year, Thetanuts Finance v3 also launched the LRT Strategy Vault, integrating Pendle’s PT-eETH product, and created a leveraged LRT Strategy Vault on the Ethereum mainnet, enabling users to earn additional returns on their LRT assets. This includes PT-weETH, PT-USDe, and other options vaults.

Taking PT weETH as an example, on the Thetanuts user interface, users ‘Zap’ their PT weETH. PT weETH is deposited into the Thetanuts v3 lending market, borrowing ETH, which is then 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 Yield

In addition to utilizing the lending market and LRT Strategy Vault, users can also earn returns by adding liquidity.

LPs in the liquidity module will be entitled to Basic Vaults’ option fees, interest from the lending market, AMM transaction fees, potential NUTS token incentives, and potential additional token rewards.

Thetanuts Finance belongs to the Vaults model of options products, where option sellers deposit collateral into a vault and mint ERC-20 tokens representing option rights at a certain collateralization rate. Holding this token is considered as having the right of the options buyer, which will automatically exercise or expire at maturity.

As a representative project for issuing structured products, Thetanuts’ strategies are traditionally seller-centric, but after v3 it also supports buyer strategies. By using AMM and lending markets, LPs and traders can choose to go long or short on-chain options.

With AMM, users can also close their positions immediately, unlike before where they had to wait for the end of the next epoch LP to exit the position. In addition, Thetanuts v3 simplifies the user interface, abstracts various transaction functions such as Basic Vault and lending, and simplifies the interactive experience, which greatly improves the user experience.

After the launch of the NUTS token, Thetanuts will also launch a DAO governance model, further advancing its decentralization journey. As a leading on-chain options protocol today, Thetanuts has achieved some success, but bringing options to more traders for profit is a long-term endeavor.

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