We should be able to create PUT options as well using UMA.
For instance we want to sell tokenized gold put options, or a put option on SUSHI tokens
A synth representing the put can be minted by collateralizing a stable coin such as USDC (or cUSD or aUSD tokens based on funds deployed on compound or aave)
The synth would be sold as a PUT option on an AMM, people who want downside protection on that asset can buy that synth and if the price goes below the target price
then they have the right to redeem the synth for a preagreed upon price.
The other token need not necessarily have significant onchain liquidity(edited)
but only a reliable price feed
and the redemption would happen only at expiry
similar to the call option except the collateral is a cash eq
1 Like
We want to consider using this as a replacement to OPEN DAO cashbox tech which acts as a pool of insurance money against defaults
Would be a nice compliment to the call options.
I totally agree with this. It’s constructed the same way as call options, but with a stablecoin as collateral.
We thought we would create the call options first to utilize idle assets in DeFi treasury portfolios. So in some ways leverage that to get liquidity. And once people got familiar with the call options we can create puts. Would love to explore this with you more.