DeFi options platform uses social logins, margin trading to draw in liquidity
A DeFi options platform using social logins and undercollateralized trading to draw in liquidity providers just launched, according to a June 15 announcement. The protocol, called “Synquote,” is capable of handling large trades with much less slippage than previous options platforms, the team claims.
According to the announcement, Synquote did over $25 million of notional volume in its beta period, which began on March 17. The largest trade during this period was for $1 million in notional volume, which was executed without any detectable slippage, developers told Cointelegraph.
In a conversation with Cointelegraph, Synquote founder Ahmed Attia explained the strategy the protocol uses to attract liquidity. First, it doesn’t use an automated market maker to determine prices. Instead, an off-chain, peer-to-peer request-for-quote protocol matches buyers and sellers, helping to allow greater flexibility in terms of the types of orders that can be placed by market makers.
Second, the protocol allows liquidity providers to make undercollateralized trades. For example, they can issue or sell options with “as little USDC [USD Coin] as one-tenth of the underlying asset’s value if [they’re] selling a short-dated naked call.” Attia argued that allowing undercollateralized trades is the only way to attract large institutions to the DeFi space, stating:
Social logins have also been implemented as part of the public launch, the Synquote founder stated. Both market makers and traders can now log in using their Google credentials without needing to download a wallet or copy down seed words. This is possible because of the Web3Auth platform, a type of new wallet tech that allows for seedless wallets.
Related: Anon-powered options: DeFi
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