DeFi & Options
rDPX v2: Using the Perpetual Put Vaults
Good mnueenis my beloved readers and welcome to CEO’s series on the $ETH Perpetual Put Vault (”PPV”).
If you are someone who is:
- Holding $ETH
- Wants yield
- Likes $rDPX
This could be the perfect product for you!
Let us have a proverbial geeze, my beloved Employee.
What is the $ETH PPV?
The $ETH PPV is a one-click vault that allows you to deposit $ETH to earn multiple layers of yield.
$ETH deposits are used to write 25% OTM rDPX-ETH put options. Each time a user bonds in, $ETH corresponding to the $rDPX bonded will be reserved - in the event rDPX/ETH falls to that strike price, $ETH from the PPV will be swapped for $rDPX from the $rDPX Backing Reserves.
Note that PPV positions are pooled against total $rDPX bonded based on their price at time of bonding. This means PPV depositors may have exposure to multiple strike prices.
Why would I provide liquidity for this?
As with all DeFi products, it all comes down to yield.
$ETH depositors in the PPV are eligible for multiple layers which will be paid as funding (claimable rewards that stream linearly throughout the month):
$ETH deposits in the put vault will be staked on an LSD protocol such as FraxFerry or Lido Finance.
This yield is given to PPV depositors.
rDPX v2 Protocol Revenue
rDPX v2 generates revenue by deploying bonded assets (see Use of Bonded Assets).
A portion of this yield is given to PPV depositors.
Token incentives such as $DPX (provided by Dopex) and $ARB (provided by the Arbitrum STIP) have been allocated to depositors.
225,000 $ARB has been allocated during the STIP (3 months) which will then be switched to 3k $DPX/year.
How do I withdraw liquidity?
Users may queue their $ETH for withdrawal from the vault at any time which will allow them to withdraw their deposit from the next epoch.
Note that this is only possible if $ETH in the PPV exceeds a minimum of one quarter of $rtETH’s supply which is the target ratio as per the rDPX v2 System Specification.
The $ETH PPV is a neat little product for $ETH holders to add multiple layers of yield while allowing them to scoop up $rDPX if the price falls.
On the other hand, it is also the backbone of the rDPX v2 system which provides protection on $rtETH’s collateral value. A truly balanced proposition indeed.
Until next time, my dear readers.
Dopex is a decentralized options protocol that aims to maximize liquidity, minimize losses for option writers and maximize gains for option buyers — all in a passive manner. Dopex uses option pools to allow anyone to earn a yield passively. Offering value to both option sellers and buyers by ensuring fair and optimized option prices across all strike prices and expiries. This is thanks to our own innovative and state-of-the-art option pricing model that replicates volatility smiles.
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