2021-10-20 17:00 |
Decentralized Layer-2 oracle solution Umbrella Network has introduced an arbitrage-free pricing model for crypto derivatives, Invezz learned from a press release. The new service aims to provide users with more comprehensive real-time pricing datasets by bringing arbitrage free information for option pricing to the crypto ecosystem.
Pricing available for ETH and BSC ecosystemsAt the beginning, the arbitrage-free pricing model will be available on Ethereum (ETH/USD) and Binance Smart Chain. It will come with full options datasets for Bitcoin (BTC/USD) and Ethereum with the call and put prices, the expiry data, the underlying crypto asset, and the volatility expected.
660 new trading pairsUmbrella Network is including 660 new trading pairs with 220 options instruments, aimed at increasing profits. Users can access data feeds via DeFi applications on Umbrella Network’s Layer 2 Data (L2D).
Sam Kim, Partner at Umbrella Network, commented:
DeFi doesn’t have a viable or developed options market. We felt that offering our advanced arbitrage-free options pricing data will be crucial for the DeFi market given the importance of options in traditional finance, not only for speculation but for risk management. As a decentralized oracle service, we work with data that is necessary to calculate true arbitrage-free option prices. So to us, spearheading this movement towards efficient option pricing is the next step to building a thriving derivatives market.
Model helps overcome the lack of data and liquidity within DeFi optionsUsers face insufficient data and liquidity within the DeFi options space, especially on maturities and strikes. This has resulted in option price gaps and investors risk trading on partial information. What’s more, this lack of data has led to prohibitive DeFi option prices, which has had a thinly traded market as a consequence.
The platform’s arbitrage-free data model will help overcome these difficulties and provide more competitive prices. It will provide a full overview of options markets, options with varying maturities, but the same strike, options with the same maturity.
Holistic market viewUmbrella Network’s arbitrage-free options data not only provides a full price set, but also a holistic view of the market. It enables traders to make informed decisions.
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