What is Defi and how does it work?

DeFi, or decentralized finance, is a relatively new trend in the cryptocurrency industry, which in 2019-2020 showed a rapid increase in consumer interest.

According to Binance Research, the decentralized finance market experienced a mini-boom in 2019, expanding both the customer base and infrastructure. And in 2020, a real hype unfolded around this area, as in 2017 around ICO. In 2021, during the next development of the bullish trend, coins from the DeFi sphere showed the greatest profit.

Previously, the share of DeFi in the scale of the cryptocurrency market was relatively small, but in 2021 the sector has grown rapidly and has attracted many traders and investors with its opportunities.

DeFi (decentralized finance) is a set of services and applications developed using blockchain, cryptocurrencies/tokens and smart contracts. These services are integrated into a single network, offering users services that are usually provided by banks and other financial institutions.

In simple words, this is a kind of alternative banking sector, the services of which can be used by people who do not want / are not able to deal with traditional financial institutions.

Opyn is a capital efficient DeFi options protocol
Opyn is a capital efficient DeFi options protocol

DeFi allows:

  • Expand access to financial instruments in countries with underdeveloped banking sectors;
  • Create a truly decentralized market, where the cost of services will not be determined by the will of the government or company leaders;
  • Receive passive income from cryptocurrency assets;
  • Significantly reduce commission fees for transfers, loans, deposits.

DeFi applications must comply with the following principles:

  • Accessibility to anyone with an internet connection;
  • Transparency of work for all participants while maintaining individual confidentiality;
  • Open source and ensuring compatibility with other decentralized projects.

At the moment, most DeFi services issue crypto-backed loans, accept crypto deposits, or create decentralized platforms for direct lending (you to me, I to you). For transactions, as a rule, Ethereum is used and, less often, bitcoin.

Since Ethereum has become the main DeFi cryptocurrency, the popularity of the industry is determined by the number of locked coins (collateralized Ethereum is blocked).

Opyn is building DeFi-native derivatives platform
Opyn is building DeFi-native derivatives platform

What is Opin?

Opyn is a popular project among DeFi apologists. It was founded by UC Berkeley alumni Aparna Krishnan, Zubin Koticha, and Alexis Gauba.

Built on top of the Convexity Protocol, the platform raised $2.16 million in seed funding from Dragonfly Capital in the summer of 2020.

Despite the losses incurred as a result of the hack, the following year the project raised $6.7 million in a Series A funding round from Paradigm, Synthetix co-founder Kane Warwick, and Stani Kulechov, head of DeFi project Aave.

In 2019, Opyn was one of the first to offer decentralized options to the market. Initially, the opyn protocol allowed the creation of American options in the form of oTokens, 100% backed by the underlying asset.

The second version of the protocol began to have some innovative features, including auto-execution and flash release.

So what is Opyn? Opyn is the first options platform in the DeFi space. It uses the previously mentioned Convexity. Opyn allows you to trade an option contract after it has been created from a decentralized liquidity pool.

Below, we will discuss how to use Opyn and invest with Opyn.

Opyn’s  available assets are options for ETH
Opyn’s available assets are options for ETH

Available assets

Opyn is a relatively young platform, so the set of tools to get the job done is very limited. The main underlying asset of the platform is ETH.

What kind of options are available on Opyn?

Many users who don't know what is Opyn probably don't know what options are. So before going into what is Opyn, how to use Opyn, and invest with Opyn, let me make a brief introduction to explain to the non-trading reader what options are.

An option is a preliminary transaction between two bidders. They are divided into two types: Put (purchase) and Call (sale). The option buyer reserves the right to buy out a certain amount of certain exchange assets, whether they are real goods, securities or currency at the cost specified in this contract at a strictly defined time.

Put options can also be redeemed. The seller, concluding a deal, assumes responsibility for its execution. In principle, the same trader can be both a buyer and a seller.

Options differ in expiration time:

  • The European option is executed strictly on the last day, before the expiration date;
  • American can be sold at any time while it is still valid;
  • Quasi-American, provides that the contract will indicate several periods of time for its implementation.

The meaning of these transactions is to try to capitalize on the growth or fall in demand for a particular asset.

Options are a complex financial instrument, especially for beginner traders. But experienced participants in the digital market, including miners, will find it very interesting. With the right calculation, options help to fix and increase profits.

Using the opyn protocol, you can work with European style options.

Opyn also rebranded in June and introduced a new margin trading system for fractionally backed options. This feature became available to users at the end of last summer.

Long squeeth (ETH²) gives you a leveraged position with unlimited upside
Long squeeth (ETH²) gives you a leveraged position with unlimited upside

How do I use Opin?

Opyn is a DeFi platform, so working with it is easy and simple. Even a user who does not know what is Opyn will be able to easily and quickly connect their wallet to the platform.

After connecting your cryptocurrency wallet to the platform, you will be able to use all the available functionality. But in order to understand how to use Opyn and invest with Opyn, you must first study in detail the question of what options are and how they work. Only by understanding this will you be able to use the opyn protocol effectively.

How does Opyn work?

Opyn uses oracles to determine the execution price. Each contract is issued as an ERC-20 token and therefore becomes available for trading on any DEX.

Protective puts have long been a common strategy for traders to limit their risk. Opyn gives DeFi enthusiasts a way to protect themselves from financial risks like ETH price crashes and technical risks like hacks.

Therefore, if you are actively working with ETH, you need to take a closer look and understand how to use Opyn in Malaysia.

Features of Opyn v2 open up the possibility of implementing spread strategies. This is when one option position can serve as collateral for another. For example, when buying a put option with a relatively high strike price and then using it as collateral to sell a put with a lower strike price.

Features of Opyn
Features of Opyn

How to start investing with Opyn in Malaysia?

How to use Opyn in Malaysia? Working with the platform is quite easy if you are familiar with other DeFi sites and have a good understanding of options. In this case, you can easily use the platform and invest with Opyn.

To connect to the platform, simply connect your cryptocurrency wallet to it. This action is carried out in one click and will take no more than half a minute.

Right after that, you will be able to access all the features of the platform. Select the type of options you are interested in and open a trade.

The squeeth smart contracts are insured by Sherlock for $10mm in smart contract coverage and a $1mm critical bug bounty
The squeeth smart contracts are insured by Sherlock for $10mm in smart contract coverage and a $1mm critical bug bounty

Is it safe to invest with Opyn online?

The Opyn website says that the security of the opyn protocol is a top priority for the developers. Therefore, Squeeth smart contracts have been verified by Trail of Bits and Akira and insured by Sherlock.

But her Opyn story has always been impeccable. In 2020, hackers took about $371,000 of user funds from the Opyn DeFi platform using a vulnerability in the oTokens project’s internal token.

In response to this situation, the Opyn developers carried out work aimed at improving the security of the protocol and increased rewards to third-party developers for identifying vulnerabilities. The management also conducted an additional audit of the reliability of smart contracts.

The company offered the victims to buy back their oTokens with a 20% markup to compensate for the losses.

Of course, all these activities do not guarantee you 100% protection. Therefore, investing with Opyn carries some risk, just like any other investment.

Investing with Opyn is safe and easy!
Investing with Opyn is safe and easy!

How to open an Opyn account?

Opyn is a DeFi platform, so it does not require you to open and register an account. To work with the platform, you only need to connect your wallet to it.

How does it make a deposit?

When dealing with any DeFi, you do not need to make a deposit. Funds always remain in your wallet and under your control. Smart contracts can only block used funds in your wallet. But they don't come out of it.

In this case, the responsibility for the safety of the funds lies with you. DeFi requires only reliable smart contracts that will not have vulnerabilities and will be able to provide maximum protection and safety of your funds.

How to withdraw?

Since the funds did not leave your wallet, you also do not need to withdraw funds from Opyn. The profit will be credited to your wallet automatically.

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The financial services provided by this website carry a high level of risk and can result in the loss of all your funds. You should never invest money that you cannot afford to lose