Hey everyone! In this article, I take a closer look at the status quo of the leading options trading protocols on DeFi.
New to DeFi options? Check out this beginner’s guide that tells you everything you need to know about DeFi options.
Highlights
- The market for DeFi options protocols is still relatively small. Only 4 out of the top 30 platforms have a TVL of more than $10 million.
- Overall, user numbers are quite low.
- Security ratings for a significant part of the top options protocols are only average.
The Dataset
For this analysis, I used data from DefiLlama and Token Terminal on the 30 largest decentralized finance (DeFi) options trading platforms by total value locked (TVL). Since there are still relatively few such platforms overall and the number of users is also very low in some cases, the data sets were partially incomplete. However, they were sufficient for the scope of this analysis.
With this settled, let’s take a look at what the data tells us!
DeFi Options Protocols By Total Value Locked
DeFi options trading is in its early stages. This becomes clear when looking at the total value locked (TVL) figures.
A total of four protocols have a TVL of more than $10 million. The majority is in the low-digit million range or below. For comparison: among the current top 10 of all DeFi protocols, none has a TVL of less than $2 million.
Most Used Blockchains
Among the top 30 options trading platforms, Ethereum is the most used blockchain network, followed by BNB, Arbitrum, and Polygon.
- Ethereum (17)
- BSC (14)
- Arbitrum (10)
- Polygon (10)
On average, DeFi options protocols use more than 2 different blockchains. The protocols with more blockchains also have a higher TVL on average.
17 protocols are launched on more than one chain. However, there is no relationship between the number of chains launched and the TVL of the protocol.
Timelines Of Selected Protocols
In this context, it is also interesting to see how the TVL of some projects has developed over the last 18 months.
Two things become apparent here:
- At the peak of the last bull market, the top protocols had a TVL that was many times higher than it is now.
- Since the beginning of the year, some protocols have seen an increase in the TVL, which then leveled off at a constant level. This pattern is repeated in token prices as well. More on that below.
The trends in user numbers are not quite as clear. Unfortunately, the data on this was only available for some of the larger projects and some of them were only available for the last few months.
Nevertheless, the following conclusions can be drawn:
- While the two largest protocols had high user numbers around the turn of the year, they have since plummeted.
- On the other hand, smaller platforms were able to increase slightly over the last few months.
- According to Token Terminal, the number of users for most protocols is relatively small. This is probably because most of the options traders still prefer using centralized services.
Token Price Performance
The chart below shows the price development of Lyra, Hegic, Permia, and Buffer tokens over the same period.
All four protocols saw significant price gains from around mid-January to early February 2023. However, unlike large caps like Bitcoin and Ethereum, they were mostly unable to maintain these price gains in the weeks that followed.
This indicates a typical behavior of altcoins. It is therefore to be expected that prices will increase together with the TVL and the number of users as the current bull cycle continues.
Worrying Security Stats
An elemental part of options trading is the safety of users’ funds. The potential risks in crypto are manifold, but in the case of DeFi platforms, faulty smart contracts, in particular, are a weak point.
Of the top 15 DeFi options protocols which have more than $1 million TVL, I cross-checked the security scores on Certik, DEFISafety, and cer.live. The results are mixed.
Only Lyra, Opyn, and Deri Protocol have a score above 80. Premia has inconsistent ratings across all 3 websites. The rest either have a low rating or no information can be found.
Summary
So what can be said about the current state of DeFi options protocols? Even if this segment of the crypto market is still comparatively small, some protocols have already established themselves and show promising trends in the last few months. It is to be expected that more money will pour into these platforms as the current bull market progresses.
However, users and investors should definitely consider the security issues common to crypto and do their own research before deciding on a protocol.
Disclaimer: This article is for informational and educational purposes only. It should NOT be used as an investment or financial advice. Tokens were picked randomly to be used as examples.
Read more: https://medium.com/tastycrypto/30-defi-options-protocols-the-current-status-b646c52acc9
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