What is Thetanuts Finance (NUTS)?

What is Thetanuts Finance (NUTS)?

Thetanuts Finance (NUTS) is a decentralized platform that lets users trade options on altcoins. Options are financial instruments that give traders the right, but not the obligation, to buy or sell an asset at a predetermined price before a specific date. While many options protocols focus on major cryptocurrencies like Ether and Wrapped Bitcoin, Thetanuts Finance fills a gap in the market by concentrating on altcoins.

How Thetanuts Finance (NUTS) Works

Thetanuts Finance operates through a few key components: Basic Vaults, Basic Vault LP Tokens, a Lending Market, and an Automated Market Maker (AMM). Here’s how each of these elements works together to create the best options trading experience:

Basic Vaults

The foundation of Thetanuts Finance is its Basic Vaults. These vaults sell out-of-money (OTM) European cash-settled options to accredited market makers. OTM options are those where the strike price (the price at which the option can be exercised) is higher than the current price for calls, or lower than the current price for puts. This means that these options are not yet profitable to exercise but can generate yields for users in the form of option premiums.

Each Basic Vault has pre-defined parameters such as strike price, delta (a measure of the option's sensitivity to changes in the price of the underlying asset), and tenor (the time until the option expires). These parameters create specific risk-adjusted yields, making it easier for users to understand their potential returns without having to set these parameters themselves.

Basic Vault LP Tokens

When users deposit assets into Basic Vaults, they receive Basic Vault LP Tokens. These tokens represent short volatility positions, either as short call ($XYZ-C) or short put ($XYZ-P) positions. Short call positions are designed to generate income by selling calls, while short put positions aim to accumulate the underlying asset by selling puts.

These tokens can be minted (created) when users deposit into Basic Vaults and redeemed (exchanged back for the original asset) by initiating a withdrawal from the vault. This mint and redeem process also establishes a “Mint Price,” which is the value of the LP token at the time of creation or redemption.

The Lending Market

The Lending Market in Thetanuts Finance v3 is inspired by Aave v2, a popular DeFi lending protocol. Users can deposit their Basic Vault LP Tokens into the Lending Market to earn additional interest. This market supports assets such as $XYZ-C, $XYZ-P, $XYZ, and $USDC.

Borrowers can use the Lending Market to open long positions by borrowing Basic Vault LP Tokens and selling them on the AMM. The Lending Market also supports flash loans, allowing users to borrow up to 95% of their collateral's value temporarily, which implies a theoretical leverage limit of 20x.

Automated Market Maker (AMM)

Thetanuts Finance utilizes Uniswap v3 pools in its AMM to allow users to trade long or short on-chain options. Liquidity providers add assets to these pools, enabling traders to take long or short positions. For calls, liquidity pairs are $XYZ/$XYZ-C, and for puts, they are $XYZ-P/$USDC. The price of the LP tokens in these pools, known as the “AMM Price,” is determined by the ratio of assets in the pool.

Sources of Yield

Thetanuts Finance offers users multiple ways to generate yields, making it an attractive platform for investors. Here are the five main sources of yield:

● Option Premiums: By selling OTM European cash-settled options in the Basic Vaults, users earn option premiums as yields.

● Lending Interest: Users who deposit their Basic Vault LP Tokens into the Lending Market earn interest from borrowers.

● Trading Fees: Liquidity providers in the AMM earn a 50% share of trading fees from the pools.

● NUTS Token Incentives: In the future, users may receive NUTS token rewards for providing liquidity and generating trading volume on the platform.

● Additional Token Incentives: Other blockchain ecosystems might offer extra token incentives to encourage activity on Thetanuts Finance.

NUTS Goes Live on Bitget

Thetanuts Finance's native token, NUTS, is now available for trading on Bitget.

NUTS serves as the governance token within the Thetanuts ecosystem, allowing holders to stake their tokens to gain voting power and influence over protocol decisions. By converting NUTS into veNUTS, users can participate in gauge voting and governance, contributing to the platform's long-term goals of decentralization and efficient management. Additionally, veNUTS holders can earn boosted emissions on their liquidity incentives, making it a valuable asset for those committed to the ecosystem.

Trading NUTS on Bitget offers an opportunity to engage with and support the growth of Thetanuts Finance.

How to Trade NUTS on Bitget

Listing time: May 20, 2024

Step 1: Go to NUTSUSDT spot trading page

Step 2: Enter the amount and the type of order, then click Buy/Sell

Trade NUTS on Bitget now!

Disclaimer: The opinions expressed in this article are for informational purposes only. This article does not constitute an endorsement of any of the products and services discussed or investment, financial, or trading advice. Qualified professionals should be consulted prior to making financial decisions.