ON–122: Derivatives

Coverage on dYdX, Polynomial and Friktion.

May 20, 2022

ON–122: Derivatives

About the editor: Spencer Noon is Co-founder & General Partner at Variant Fund.

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Network Coverage
Coverage on DeFi Derivatives.

① dYdX

📈 dYdX iOS app launch increases active users by 55%

  • On May 10, dYdX became one of the first DeFi protocols to launch its own iOS app to the public. During the beta, over 200k people signed up for the waitlist. Soon after the launch, dYdX active users increased by 55%. The iOS app puts dYdX even closer to feature parity with major CEXs.
Source: dYdX Metrics
  • On May 9 and May 11, users on dYdX experienced much greater levels of liquidations than average. Over $105m in liquidations occurred between May 9 and May 12.
Source: Metrics.dydx.exchange
  • Trading rewards for Epoch 9 were distributed across 6,546 unique addresses. The distribution of Trading Rewards remain pretty evenly distributed across a long tail of addresses. Overall participation in the dYdX liquidity mining programs remains relatively constant across all epochs.
Source: dYdX Foundation

② Polynomial

📈 Polynomial has over 75% retention rate

  • Polynomial Earn is the first DeFi options vault that automates option strategies to earn yield, executing on-chain via an AMM. Built on Optimism, the vaults have been running near capacity since their inception at a TVL of $2.7m. Polynomial drove around 20% of Notional Volume in Lyra AMM in April.
Source: DeFi Llama
  • Since launch, 78% of the users who have deposited in the Polynomial Earn Vaults haven't withdrawn from the Vaults. With a 140% increase in users from the past month, vaults consistently drive user volume and show strong retention.
Source: Dune Analytics - @gauthamzz
  • 65% of users are depositing under $100. Combined with the low gas fees experienced when transacting on Optimism, this presents a relatively accessible option for onboarding new users to the option vaults.
Source: Dune Analytics - @gauthamzz

③ Friktion

📈 ~$2b cumulative volume < 6 months post launch

  • Friktion is a full-stack portfolio management protocol on Solana that offers vault strategies called Volts. Volts include: covered call selling, cash-secured put selling, a delta-neutral power-2 perp shorting strategy for range-bound markets, and a delta-hedged basis strategy​. 27 different vaults are offered across these four strategies. Since mainnet launch, Friktion has done $2.6 billion in volume and generated $9 million in premium. Recently, volume and premium both took a big step up.
Source: Friktion
  • Friktion’s TVL is currently $69 million. Until the most recent market weakness, TVL in Volt 1 (covered calls: blue line below) had been fairly steady in the $70-$90 million range while TVL in Volt 2 (cash-secured puts: green line) had grown from ~$12 million to ~$40 million.
Source: Friktion
  • The most popular Volts are the covered call Volts for BTC, SOL, FTT, and SRM as well as the delta-hedged basis strategy in SOL. These top 5 Volts currently account for $43 million of TVL. The remaining 22 Volts, some of which are recent additions, range in TVL from ~$50K to $4M in TVL.
Source: Friktion