Decentralized Finance (DeFi) is evolving at such a rapid rate that new investment vehicles appear every day, with Opium offering the latest.
In what it has described as “a strategy for bearish investors,” the synthetic derivatives network Opium Network has unveiled a product that offers protection against large downward movements in Ethereum prices.
Opium has explained that its “ETH Dump Protection” is based on a “protective put option” which is a strategy for investors who believe that the price of an asset will drop in the future, adding:
“It can be used by bullish investors to hedge against possible losses and obtain downside protection.”
In a tweet on June 13, Opium claimed that it works like any other decentralized insurance. Investors buy protection for a premium and, In case the asset falls below the strike price, they receive the difference between the strike price and the current value of ETH.
Defi
Rooting for the bears
Derivatives offer the option to go short on an asset, and this is basically fueling that action by offering rewards if the asset plummets.
“If you are bearish on an asset, you can use the ETH Dump Protection as part of the classic strategy for short trading: if you think ETH will plummet rather than grow, buy the ETH Dump Protection and get paid when ETH goes down. “
The offering is part of the Opium insurance suite of the protocol, launched in December 2020, which offers different levels of protection for various DeFi strategies, smart contracts and crypto assets.
In early April, Opium Finance partnered with Gnosis and the Universal Market Access (UMA) platform to introduce more accurate optimistic oracles and less prone to price manipulation.
Later that month, the DeFi protocol released a “Turbo ETH” leverage product that allowed traders to place leveraged bets on price increases.
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Spacex
The last Opium announcement was in late May for a product based on derivatives to secure SpaceX launches.
OPIUM price outlook
The native coin of the same name, Opium, has gained 3.4% on the day to reach $ 2.15 at press time.
However, its price has been trending lower since the beginning of February, and it is currently a painful 90% below its all-time high of $ 23.
With an outstanding offering of 6.7 million tokens, OPIUM has a current market capitalization of $ 14.3 million, making it a small fish compared to many other DeFi tokens.
The post Opium Finance offers DeFi protection against Ethereum dumps was first seen on BeInCrypto.
