We are excited to announce the launch of a new NFTFi primitive: NOVs (non-fungible options vaults).
The financialization of NFTs is inevitable.
DeFi platforms providing collateral for liquid NFTs are at the forefront. This model has proven to be resilient and scalable. However, it is a process that requires multiple transactions and protocols. It also requires non-trivial management of your collateral positions and the DeFi protocols where you deposit your loaned amount.
The process to generate yield or reduce risk on your NFT positions just got easier. NFT holders will be able to write call options against their assets to generate cash flow from premiums. Yes, these are permissionless, decentralized and on-chain options on L2.
A few decentralized NFT options protocols have launched this year. But they all seem to share a few problems which include low liquidity, unfair pricing for buyers and/or writers, and lack of adoption.
We are spending a lot of time designing and building the product and early partnerships to ensure JPEG X solves these problems. Our first solution is a peer 2 option vault model allowing NFT holders to passively LP, effectively writing covered option calls. Call option buyers have access to more liquidity at different strike prices. This design significantly improves the user experience generating more transactions and adoption.
This transforms cryptopunks from static investments, into yield-earning products right on our platform.
The protocol will be managed by a limited supply governance token, JPEGX, that will oversee, administer, and change parameters to the protocol. The protocol will also issue Dopex styled rebate tokens rJPEGX, which are minted and distributed for any losses incurred by pool participants. More details on tokenomics, option pricing, oracles, and settlement will be shared in a future post.
Options are tricky and our mission is to make them accessible to NFT investors and speculators. We will initially do this by making the process as passive as possible while limiting all participants’ downside risk.
Our vision for the future sees the NFT space easily deploying even more complex option strategies to enhance returns, bet on the market’s movement or hedge existing positions.
We are partnering with and onboarding well respected and knowledgeable members of both the DeFi and NFT communities to help advise the project. We look forward to having you.
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