A brief overview of the DYMMAX protocol, that provides a decentralized way for issuing options for cryptocurrencies based on the parimutuel betting with the fixed odds pricing model

1. DYMMAX PROTOCOL
OVERVIEW
by Dmitry Meshkov

2. INTRODUCTION
Crypto derivatives are skyrocketing
• $1.8Bn total open interest
• $3.5Bn trading volume
2
According to CoinGeco

3. INTRODUCTION
But exchanges are vulnerable
• October 1: a lawsuit from CFTC to BitMEX
• October 16: OKEx closed withdrawals
3
According to CoinGeco

4. DeFi
• No wonder that DeFi's market is growing
• Decentralized exchanges, futures, lending, ...
According to Defi Pulse
4

5. Decentralized options
• But still no solution for decentralized options
• The main problem with vanilla options - a seller
should lock a lot of funds to ensure payments
• Big prices and low liquidity as a result
5

6. DYMMAX: auctions
Here DYMMAX comes:
• Option strategies for bear, bull and flat markets
• No dedicated option seller
6

7. DYMMAX: auctions
Strategies compensate each
other such that the bank is
always enough for payments
•
Option price is efficiently
calculated off-chain
•
Profit/Loss
10
20
30
40
50
0
10
20
30
40
50 10 20 30 40 50
10
20
30
40
5040 30 20 10
7

8. DYMMAX: Liquidity pool
Initial liquidity is useful to bootstrap auctions and liquidity pools
solves this
•
A user can lock token X and receive dmX pool tokens•
POOL
dmUSDT
USER
8

9. DYMMAX: Liquidity pool
X tokens will automatically provide liquidity to options with X
quote currency
•
dmX token holders share fees and profits from this pool•
USDT POOL AUCTION
ETH/USDT
PROFIT + FEES
9

10. DYMMAX: Liquidity pool
Various pool tokens will circulate simultaneously – e.g. dmUSDT,
dmBTC, dmETH
•
DMX governance token will connect them•
dmUSDT
dmBTC
dmETH
...
10

11. DYMMAX: Liquidity pool
To lock funds into the liquidity pool, you have to stake your DMX tokens
(and vice versa)
•
Increasing DMX price will allow to lock more funds into liquidity pools and
get benefits from the DYMMAX protocol
•
USDT POOL
DMX STAKING
USER
11

12. Thank you!
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Dmitry Meshkov
catena@protonmail.com