Making NFT more investable!
Hedge, collateralize, buy and sell NFT options on DoubleWeb3.
What is an NFT option?
The term option refers to a financial instrument that is based on the value of the underlying NFT. An options contract offers the buyer the opportunity to buy or sell the underlying asset. Unlike futures, the holder is not required to buy or sell the asset if they decide against it.
Options are versatile financial products. These contracts involve a buyer and seller, where the buyer pays a premium for the rights granted by the contract.
An option that conveys to the holder the right to buy at a specified price is referred to as a CALL option, while one that conveys the right to sell at a specified price is known as a PUT option.
A call option would usually be exercised only when the strike price is below the market value of the underlying asset. In contrast, a put option would usually be exercised only when the strike price is above the market value.
DoubleWeb3 decentralized NFT option trading platform offers American options; it can be exercised at any time between the date of purchase and the expiration date.
There are three main parts of a Doubleweb3 NFT option contract:
Premium
The cost that buyer pays the seller for the right to buy or sell the NFT.
Strike price
It is a fixed price at which the owner of the option can buy (in the case of a call), or sell (in the case of a put), the underlying NFT.
Duration
The time frame to exercise the option contract. We offer contracts for 3 days, 7 days and 30 days.
Why do we need NFT options
Derivatives play a very crucial role in financial market, investors use derivatives to hedge against their investment. In fact, the crypto derivatives market is much more liquid than the NFT market, as the world’s leading NFT trading platform OpenSea, for example, trades at a rate of about $70 million a day, while the daily trading volume of crypto derivatives on Binance, for example, is $43 billion.
By introducing derivatives to NFT market creates new opportunities to attract investments and greater liquidity to the NFT marketplace via the secondary market. It allows investors to hedge against the risk of losing market value, it also provides an opportunity to short an NFT and invest in NFT with leverage.
As a holder
Protect our NFT investment from the volatile market. If you are holding a BAYC with a current floor price equal to 80ETH, you can buy a put option with a strike price of 78ETH. If the floor price drops to 70ETH, you could exercise the option and sell your BAYC for 78ETH.
If you think the floor price will not rise in a short period, you can sell a call option and earn the premium to make extra income.
As an investor
Investing in a Bluechip NFT can be costly. DoubleWeb3 NFT option allows investors to hold a leveraged position in an NFT at a lower cost than buying the NFT directly.
For example, if you think the floor price of BAYC will rise by 10 ETH within a month. You can buy a BAYC call option for 0.5ETH and exercise the contract when the price moves up.
On the other hand, if you think the price of BAYC will move down, you can also buy a put option and make money when the price sinks.
How does it work?
DoubleWeb3 NFT option platform consists of an off-chain order book and an on-chain collateralize / settlement layer.
By introducing the pre-signed offer, it allows buyer to send an offer without paying gas.
There are 4 actions you can take on our platform:
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long call (buying a call Option, paying the premium)
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short call (selling a call Option, earning the premium)
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long put (buying a put Option, paying the premium)
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short put (buying a put Option, earning the premium)
In order to buy an option, you can purchase the available contract or put up an offer. It works like opensea offers. You will need to authorize doublweb3 to use your WETH access to put on an offer. (putting on an offer doesn't require gas)
If you want to sell an option, you can accept an existing offer. Or you can open a contract by staking an NFT with your desired strike price, premium, and duration. You can always modify the settings according to the market situation.
You can take a look at our demo video.