Derivatives Framework

Overview of the Zeta derivatives framework

Existing DeFi Approach To Derivatives Contracts

Looking at other DeFi platforms and how they generate expiries/strikes we typically see two kinds of approach being used:
1) Options are customized by the user or
2) Options are manually created by an admin
The problem with the first approach is that these customized options may not be popular or standardized therefore they may not attract sufficient liquidity for accurate pricing and depth.
The problem with the second approach is that it's not decentralized.
Let's explore how Zeta deals with derivatives contract generation.

Zeta's Derivatives Contract Generation Framework

Zeta currently supports trading for European Cash Settled Options, Perpetual Futures and Dated Futures.
The Zeta program automatically generates new options and futures contracts to list as a previous contract approaches expiry. This ensures that standardized derivatives contracts for trading always exist.
For options contracts, the protocol leverages the oracle feed to fetch the underlying asset price. By closely tracking this Zeta can generate relevant strikes for trading.