Uniswap-based ‘perpetual options’ protocol tests liquidity waters

Panoptic is looking to create more options for those trading options.

Crypto options trading is so far mostly limited to Bitcoin and Ethereum contracts on centralized exchanges. Coinglass showed $493.15 million in open interest on the centralized exchange Deribit alone on Oct. 10, while DeFiLlama listed $21.23 million in options volume on decentralized exchanges as a whole the same day.

Today, Panoptic released the beta version of a trading platform for perpetual options — allowing users to trade options on any asset available on Uniswap v3.

Perpetual futures, or perps, were popularized by Bitmex in 2016 as a way to make leveraged trades without the need for much upfront capital. Unlike traditional futures, perps are perpetual — that is, they lack an expiration date as to when traders must buy or sell the asset.

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Panoptic is hoping to apply perpetual trading to options. Options contracts allow buyers to purchase an asset from a seller at a set price in the future — essentially making a bet on the future price of an asset.

With trading volume on decentralized exchanges (DEXs) having fallen every month since March, per DeFiLlama, starting up a novel DeFi trading platform might not seem immediately lucrative.

“Perpetual options have been tried for the last few years but close to zero adoption, so it may be too complicated of a product for traders at the moment,” said derivatives platform Aevo co-founder Julian Koh. “Vanilla options are complicated enough but at least most people understand the risk profile of them.”

But Jesper Kristensen, co-founder of Panoptic, argues Uniswap liquidity providers have similar payoff profiles to selling perpetual options, as both amount to placing a bet on low volatility.

“There’s already like $3 billion of perpetual options that are sold,” Kristensen said of Uniswap liquidity providers. “They just need to now move to Panoptic instead.”

The perpetual options platform represents the first major product launch for Panoptic, which raised $4.5 million in a 2022 fundraising round joined by Uniswap Labs Ventures.

Derivatives, or contracts that let market participants trade on the price of an asset without owning the underlying asset, have become big business in crypto. Derivatives account for 79.9% of trading on crypto exchanges in September, according to a report from CCData.

And Panoptic isn’t alone in the perpetual options sector. The layer-1 blockchain Sei announced a perpetual options platform with vDEX this week.

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