SIP 72: Add More Assets to the Binary Options Markets Source

Authorpsybull
Discussions-Tohttps://research.synthetix.io/t/sip-add-more-binary-options-markets/116
StatusWIP
Created2020-07-25

Simple Summary

This SIP seeks to expand the list of assets available to Binary Options market creators, with a focus on mid-small market cap assets, to satify latent trading demand for these assets in the broader market.

Abstract

I propose that the following assets be added to the Binary Options market creation list:

[ AKRO, AMPL, BAL, BZRX, MTA, RUNE, SWTH, YFI ]

Motivation

While the Binary Options markets started off strong, interest has waned since launch, and this SIP seeks to expand the available asset list to play to the strengths of the system and capitalizing on underserved market demand. I will outline 3 categories of assets that I feel exemplify this idea: ‘DeFi Farming/governance’, ‘non-ETH-native’, and ‘unique mechanic’.

This SIP

Specification

Overview

By expanding the asset list available to the Binary Options market creators in the following categories, we can better serve market demand, which will ultimately result in more users and higher revenues for the Synthetix ecosystem.

Rationale

The general rationale is that by adding assets in some key sectors, we can target underserved demand in the trading market.

One overarching point to add, is that while, due to the nature of the system, SNX mintrs are not at risk, the markets themselves are still easily manipulated, and thus the Binary Options participants will be at risk of fraud. This is not easily mitigated, so as a precautionary measure I would recommend that total market sizes be capped at some fraction of overall asset marketcap or volume metric, but without deeper analysis I would say no more than 25,000 sUSD should be able to be bet on any individual market listed here, until such a time as a more objective cap can be determined.

The rationale behind specific sectors is as follows:

DeFi Farming/Governance

The liquidity mining craze has resulted in a number of project which seek to reward long term users though distribution of highly-inflationary tokens, which has become a source of concern for many users in the market. Having binary options available for these tokens will give the market an ability to hedge these long term risks with appropriate price strikes and expiry dates.

Suggested assets in this class: [ AKRO, BAL, BZRX, MTA, YFI ]

Non-ETH-Native

Another class of markets should be centered around tokens that do not exist natively on the ETH chain. This is already a core value proposition of the Synthetix Exchange, and we should certainly be aggressively fulfilling that promise where we can. Larger cap coins from other chains are already broadly available (many with full synths), but expanding our list to mid and small marketcap, non-ETH-native assets should be fully aligned with our goals.

Suggested assets in this class: [ SWTH, RUNE ]

Unique Mechanic

The final class of asset I am defining ‘Unique Mechanic’ to explain assets which, through a specific mechanism of their design, have a strong market-potential for a Price-and-Time specific bet. I am suggesting this based on the rebase mechanic of the Ampleforth project. I suggest that there is latent demand for traders who would like to make plays on the outcome of the rebase, but who do not trust the asset itself enough to buy it and expose themselves to the full asset price exposure. As crypto matures, I can only expect more of these assets will emerge.

Suggested assets in this class: [ AMPL ]

Technical Specification

Same technical spec as added for the COMP/LEND/KNC/REN addition, but for AKRO/AMPL/BAL/BZRX/MTA/RUNE/SWTH/YFI (couldnt find SIP for this to emulate, though)

As an added technical requirement, capping all markets listed here at 25,000 sUSD total value.

Test Cases

Same test cases as added for the COMP/LEND/KNC/REN addition

Configurable Values (Via SCCP)

While I believe the list of available assets should be configurable by SCCP, I also think that a more general ‘make the binary options list fully SCCP’ is a separate SIP to work on after this SIP is deployed and analyzed.

Copyright and related rights waived via CC0.