* Follow me on Twitter @knowerofmarkets to stay updated on future articles. If you’re feeling generous and want to send me some DPX or RBN, my ETH address is: 0x7Db280BA0fd96619D55Cd18270435A41e25948a4. Thank you so much for reading, it means the world. *
Trial by fire
In late May of 2021, Crypto Twitter was introduced to a chain checking sleuth that goes by the name @gabagooldoteth. While doing some typical detective work, gabagool (as ill refer to him as for this article) discovered something suspicious occurring over at Ribbon Finance.
Gabagool discovered that an address related to the nowdefunct Divergence Ventures VC fund had been depositing .1 ETH into Ribbon across many, many wallets. This had all occurred prior to the announcement of an airdrop from the Ribbon team, sparking outrage in the community. After all, Ribbon was a portfolio company of Divergence, and farming airdrops and effectively robbing one of your investment companies isn’t a good look.
From this simple and relatively cheap sybil attack Divergence Ventures made around 719 ETH - this being worth over $2 million at today’s prices. As Gabagool’s findings quickly spread throughout CT, Divergence went on damage control and were essentially forced to return the funds to Ribbon’s treasury. Win-win for everyone, right? Well, it’s a little more complicated than that. Sure, Ribbon recevied the stolen funds, but the damage had already been done.
Everyone quickly forgot about this series of events in a day, of course.
You see, after this airdrop fiasco, many forgot about Ribbon. While projects like dYdX, ENS and Uniswap all remained in the public eye for a couple weeks after airdrops, Ribbon dropped under the radar completely. The coin (RBN) has traded in a brutal range since its release, many have tossed the protocol off their radar altogether and very few influencers (influenzas) have mentioned it.
While many saw Ribbon as a failure due to a botched airdrop (which wasn’t their fault), the Ribbon team has been grinding in silence. Building, if you will. The team has been working on a protocol with ideas fairly unique and new to crypto, yet revolutionary in traditional finance - we’ll get into that later.
As the Curve Wars have been heating up, Ribbon has quietly stepped into the battle. While still a small cap (around $170 million at the time of writing) RBN has been making waves, reaching an all-time high of $3.81.
What’s sparked this recent break from a nasty range and how has Ribbon made its way into this crowded fight? Is it possible for Ribbon to rebound from its PR disaster and achieve success in a tumultuous market?
Spoiler alert: yes, and it’s already happening.
But wait, there’s more
You’ve read the title and probably thought I forgot about Dopex. I chose to write about these two protocols in the same article as I’d originally thought they were competitors. It turns out they aren’t, but they both deal with options so the article idea still works.
Dopex - which stands for ‘decentralized options exchange’ - is a protocol that was founded by the prolific @tztokchad. Before I dive into Dopex and how it works, I’ll go over options very briefly, as they’re relatively new to the crypto space and a lot of my readers might need a refresher.
At their core, options are an agreement between a buyer and a seller, with some important constraints. An option is the right to buy or sell a stock at a given time for a given price. These can be very beneficial for a portfolio, as none of us are genies or possess a Chainlink oracle in our heads to tell us where the price will go.
Let’s say I wanted to sell my Ethereum at $10,000 but it’s stuck at $4,000. Maybe I’m 100% certain that Eth will reach the elusive five figure mark - I just don’t know when. With options, I could sell a covered call, receiving a premium in exchange for any upside past the $10,000 mark. I could choose a strike that expires in December 2022, maybe knowing that Eth will go up some but not all the way to hit the strike price.
If Ethereum were to reach a high of $8,000 by December, that would be great - I doubled my money, recevied some premium and kept my coins. If the opposite were to happen and Eth hit $20,000, I might be a little bummed out. Sure, I was able to sell at $10,000 and receive some premium, but I capped my upside and missed out on a 5x.
So it goes.
There are also puts, which are the opposite of calls - buying puts means you want number to go down. You can also sell puts, which is similar to selling calls as you’re betting on Theta (a complicated options term) killing the value of an option, not hoping for the underlying to go down a ton.
That’s all I’ll go into, as it’s kind of a complicated subject at first glance.
Maybe you’ve heard of options after Gamestop and Wall Street Bets made headlines for a couple months. While these financial derivatives captured the mindshare of young retail investors, crypto and options have been a pair that hasn’t had its time in the limelight - yet.
Dopex aims to deliver a protocol that brings composability, fair and accurate pricing, minimal losses for LPs and a world of degeneracy for those who like to live on the wild side. But what are Dopex and Ribbon, and why have I chosen to write about them instead of the money printing mayhem occurring in Convex land?
Well, the answer is a bit of a complicated one. I’m gonna need you to dream a little with me here.
The wild world of DeFi options
I’ll start with Ribbon since I discovered them before Dopex - or maybe it’s because they have a cooler UI, I dunno. Either way, let’s get into the nitty gritty and see what all the fuss is about.
While Dopex caters to a broader community of degens, Ribbon has aimed to deliver a product built for the more risk averse who wish to earn a stable yield via selling Theta. If you’re looking for more info on this, I suggest checking out @ThetaTendies on Twitter - it’s literally in his name.
Ribbon’s core products are its Theta Vaults - currently offering covered call vaults on WBTC, AVAX, STETH and more. Ribbon is able to promise high yields without the drama of liquidity mining. While many protocols often shell out 6-8 figures on LP tokens to mercenary farmers, Ribbon can advertise a healthy and attractive yield all through the power of selling options - brilliant.
Built on top of Opyn (i think) - one of the first movers in the DeFi options space - Ribbon is able to utilize ERC-20 tokens which operate as options. I’m not very well versed in the details, but Ribbon is able to use the backbone of what Opyn has created to deliver their trademark theta vaults - something unique to the space.
Ribbon’s theta vaults are unique because they’re fully automated. In traditional markets, you might have to look for strike prices and expiries on your own or have a portfolio manager do it for you. Ribbon offers “set-and-forget” option vaults for the passive investor. Well, as passive as you can be investing your money in something like crypto.
I will say that crypto plus options sounds like a deadly combo for 99.9% of traders, but I’ll stand by it because I look forward to seeing more posts about it.
Ribbon’s theta vaults are an example of a structured product, which is a fancy term for a bundle of financial instruments that utilize derivatives to achieve a specific goal - this definition can be attributed to @chudnovglavniy, one of the big brained devs over at Ribbon.
I’m extremely bullish on structured products in DeFi, but I’ll get into that later. Because of Ribbon’s first mover status in the DeFi-structured products space, they’ve been able to attract over $300 million in TVL. Quite a solid amount for the protocol to play around and earn yield on, if you ask me.
That’s probably a good primer on what Ribbon does for now. If you’re interested in learning more (as you should, if you plan to invest) check out their docs - they’ve helped me out a ton.
Dopex, while similar to Ribbon, operates a little bit differently and offers two products: Option pools and Single Staking Option Vaults (SSOVs). Let’s start with option pools.
If a user wishes to buy standard calls or puts on an asset, they can do so through Dopex. Whether it be ETH or some other asset, you can put your money where your mouth is and try your luck with some European Options. Unlike on WSB, you can’t sell these prior to the day of expiry, but you can still make more money with them than if you hadn’t bought. As time goes on I’m sure crypto options will get even bigger and more complicated, so get some practice on Dopex now before it’s too late.
If you’ve never looked at options before, check out InTheMoney on YouTube - it’s how I started and now I’m able to lose money on options without having to look up any tutorials.
Dopex’s other product - SSOVs - are similar to Ribbon’s theta vaults, as users can deposit their assets and sell covered calls, earning yield on things like gOHM and rDPX (the rebase token of Dopex). The one key difference that I’ve had pointed out to me is that while Ribbon’s vaults are fully automated, Dopex’s are not - yet.
Also, quick sorry for all the hyperlinks. There’s too much extra info that wouldn’t really fit into the article, so do some extra clicking to get some additional tidbits, it should help out a little.
Dopex has stated they plan on bringing in over $500 million in TVL from SSOVs alone - and I don’t see why this isn’t possible. When new protocols want to gain more users and TVL, they’re forced to spend a ton of money on LP tokens and deal with mercenary farmers. Who’s to say Dopex can’t raise this money organically by offering stable yields and minimal losses? It feels like a no brainer to me.
Dopex has stated they aim to replicate the success of Robinhood and Deribit - all while being decentralized, which if you’ve watched CNBC in the past year, you probably know the of Robinhood’s lack of transparency and overly centralized structure.
Money printers and looking ahead
“But Knower, how does this relate to Cur-”
Oh, how could I forget?
I was inspired to write this after stumbling upon the Ribbonomics article that Ribbon posted on Medium. So, what the hell are Ribbonomics, and will we be teaching them to high schoolers in the near future?
As you’re probably well aware, Curve Finance achieved the greatest DeFi money printer tokenomics with their veCRV and gauge voting mechanisms - maybe the greatest that we’ll ever see. Because of these seemingly simple and harmless incentives, the Curve Wars have been started by Convex Finance and other protocols. If you wish to read more about it, check out some of my other articles.
Because of Curve and Convex’s huge success - $24 billion and $20 billion in TVL respectively - Ribbon has set out to mimic some of those tokenomics. I introduce to you the concept of useful governance, or the useful governance token. Allow me to explain.
Many protocols out there have a governance token - if not all! While this is good and fun for team members and early investors, it’s often a bad time for investors due to bloated FDVs and lack of vision for the protocol. DeFi protocols are a dime a dozen.
Maybe you can vote on neat proposals with these tokens or provide liquidity with it. I don’t know, maybe there’s more to do. Maybe you just like holding it because it feels cool.
Ribbon wants to fix this. Sure, a ton of protocols have 9 or 10 figure TVLs and are vastly undervalued, but how many have good tokenomics? Sure, RBN has a very high FDV. But they’re working on it by adding the greatest tokenomics DeFi has ever seen, ala the veCRV model.
I present to you veRBN, if it wasn’t already obvious enough.
“But Knower, how does copying veCRV’s token-”
Silence, naive anon. I am minoring in Ponzinomics, I know my stuff.
I get it, you’re probably wondering how this is bullish and how a governance token can revamp its tokenomics in any meaningful way. Let me give out some alpha.
CRV and CVX have pumped an unhealthy amount in the past few months, and it’s only going to continue. Even YFI pumped after their tokenomics revamp announcement. What do you think RBN will do? Do you seriously think options won’t become the next big thing in DeFi?
Position yourself accordingly.
With the implementation of these new tokenomics, users can earn boosted rewards and earn more governance weight the longer they lock up their RBN. If this isn’t appealing enough, think back to the “guaranteed” yields I mentioned that come from selling theta. Because Ribbon doesn’t have to rely on mercenary farmers, they can always keep a healthy TVL, meaning they can always earn revenues aka stakers can always earn a portion of fees. Here is a small portion of the Ribbonomics article:
It’s that simple. Ribbon was made for these tokenomics, it’s just a shame it didn’t happen sooner.
Almost forgot about DPX again - how could I? While I’m super excited for what’s to come with Ribbon, I’d be lying if I said I wasn’t more excited about DPX.
It’s vote escrow season, so I may as well introduce you to veDPX. No, I’m not kidding, this is happening too. Dopex is planning on adding [Redacted] option vaults, which will essentially be a proxy for users to bet on which way the Curve gauge swings towards. Yes, you’ll be able to literally bet on the Curve Wars via options.
Things are only going to get weirder.
These will be options with weekly epochs - periods of time used to measure length of an option - and have Thursday expiries according to @Halko500k in this informative article filled with hopium.
While I could try and give you another degenerate-centric scenario, Halko said it best with this tidbit:
That’s a lot of money flowing into Dopex aka a lot of revenues aka a lot of value accrual going back to veDPX holders. Oh, and I forgot to mention the part about useful governance. I don’t know about you, but controlling the Curve Wars via options speculating on the Curve Gauge sounds pretty useful and influential to me.
Dopex has also stated they plan to add SSOVs for cvxFXS (this one is HUGE), SPELL, AVAX and many more - this is so bullish it hurts. Options on SPELL alone is enough to bring in an entire frog nation, tossing cvxFXS into the mix is almost dangerous.
As options continue to expand across DeFi and Ribbon / Dopex continue to grow user counts and TVL, I’ll be watching with a hopeful gaze. I can’t help but feel excited about the future, as it seems the war is only beginning. Pretty soon you’ll be able to buy literal call options on the Curve Wars - and you still won’t buy because you’re worried what Bitcoin will do, anon?
Is Tetranode going to continue to shill Dopex to his 150,000 followers? The answer is probably a yes.
Is Tz going to continue to shill his wonderful project to the world and shill our bags. Of course he is.
I like RBN and DPX long term, despite RBN’s nasty FDV. Maybe I’ll sell if it hits $10 - maybe I won’t. I really don’t know sometimes. Do I believe that options will make a HUGE splash in crypto and provide an entire new paradigm for all levels of speculators? The answer is a resounding yes.
Both protocols have healthy 9 figure TVLs, and I think Ribbon’s is around $250 million right now while Dopex’s might be a little over $500 million. I expect these numbers to do many multiples in the coming months.
I won’t tell you what to buy or when to buy it. None of this is sound financial advice. My primary goal is to entertain, and hopefully I’m doing just that.
I’ve really enjoyed writing these articles and will continue to do so until the market goes to zero. I’ve been obsessed with both Ribbon and Dopex this past week, and honestly feel that they’ve both been horrifically underappreciated / underlooked.
As I started tweeting about Dopex, my mentions were flooded with messages from many kind and intelligent team / community members, pointing me in the right direction on where to find solid info on the project.
I appreciate it a ton.
To be completely honest, I haven’t seen a community like Dopex’s since the earlier days of Olympus DAO. Could DPX go on a run like OHM did late Q3? Maybe. It sure does feel like it will to me, at least.
All I know is that both protocols are fundamentally sound and it would be silly not to support them and their lofty goals. Hope you enjoyed the article, and remember to do your own research before buying any tickers I mention.
Thanks for reading and thank you very, very much for 1,000 subscribers.
Special shoutout to @xenes1s, @0xCasio, @Halko500k and anyone else I forget to mention, thanks for all the info!