Zeta Markets Receives EcoSerum Grant

The options-trading platform plans to take advantage of Solana’s scalability to offer a diverse product unlike any other project on the chain.

By
Utulu Hope
on
June 6, 2021
Category:
Breaking News

Zeta The Latest To Profit From EcoSerum Grant 

EcoSerum has paved the way for many promising projects, including the likes of Bonfida and Solanium. By using 2% of Serum fees, new projects on the Solana blockchain have been developed and funded through the Grant. The latest project to benefit from EcoSerum’s support is Zeta Markets. The under-collateralized decentralized finance (DeFi) options platform announced the development on the 3rd of June. The team stated they would use the grant to accelerate their options protocol as part of the Serum ecosystem. 

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Introducing Zeta Markets

Zeta is a premier under-collateralized DeFi options platform that provides liquid derivatives trading to institutions and individuals. Zeta looks to exploit the potential for development by providing the ecosystem with bulletproof options for anyone to hedge against crypto market volatility.

Zeta will be the first DeFi options protocol that pairs under-collateralized options via portfolio margin functions with a hybrid orderbook and an Automated Market Maker (AMM). The protocol will also provide leverage, accurate pricing, and deep liquidity for its market. Zeta will ensure options trading in a non-custodial manner without tampering with the speed/accuracy of centralized exchanges (CEXes). The protocol achieves all these exciting feats with the following innovations 

  • Global Collateral Vault: This is utilized to facilitate portfolio margining. Ths GCV and clearinghouse smart contract is leveraged for managing collateral on a global level, allowing users to take under-collateralized options positions for the same underlying and expiry. 
  • Hybrid Central Limit Order Book (CLOB) and Virtual Automated Market Maker (vAMM): The essence of this is to facilitate liquidity bootstrapping across all strikes. 
  • Dynamic Volatility Adjustment (DVA): The vAMM uses a global volatility surface and the Black-Scholes Merton (BSM) pricing model to get prices for options across all strikes based on the market volatility. With this, traders could buy options at reasonable prices, and LPs can earn a steady return on capital like Uniswap LP and Raydium. 
  • Liquidation Engine: Zeta introduced the liquidity engine to facilitate the trading and writing of options without over-collateralization of the LP, while also cutting out traders’ risks. The liquidity engine will automatically reduce risks in tough market conditions. 


What Is Options Trading? 

Options are a framework for traders to place bets on price, volatility, tax, interest rates, and many other factors. They are also the best choice for investors that need to lock in profits, hedge their portfolio, and increase their interests. When used by the right individuals, options help to take off unwanted risks and take on wanted risks. According to TradeFi, an option is described as the right, but not an obligation, to buy or sell the underlying at a predetermined time and price. Options allow buyers to choose (call) whether or not they want to buy (or sell) the underlying asset at the strike price once the contract hits its expiry date. Options trading has a lot of variables, and is generally only recommended for experienced traders. There are large potential losses that can be incurred, and users should DYOR (Do Your Own Research) before trying out the feature.


Zeta Trading Options 

Collateralization: User places their USDC collateral into the GCV in any of these two accounts: 

  1. User Vault: This vault works for individual users. It holds the collateral for the trading options of individuals. 
  2. AMM Vault: This vault holds the communal liquidity pool supplying the AMM. 

Trading: Users who participate in the market, whether individuals or the AMM, place their orders on the orderbook. These orders can then be picked up by anyone else who is engaging with the DEX hosting the orderbook.

Liquidation: This trading option is elective. When a participant falls under the maintenance margin, their at-risk position is liquidated by posting it at loss to the orderbook. The losing position can be taken over by other participants, including the AMM that acts as a backstop. Liquidation is a risk heightened by volatility, which Zeta is trying to circumvent through their hybrid orderbook.

Settlement: Once the time of expiry has reached, the clearinghouse collects every outstanding instance of the given option and queries the price of the underlying asset (e.g SOL) from a price oracle. This is used to calculate the PnL of each trader and transfers the figure back to the GCV. 

Withdrawal 

The users withdraw their collateral from the vault to their wallets. This can only be completed if the user has not overstretched their assets on option calls, which associates a level of risk with interacting with these trades. 


Features Of Zeta 

The DeFi protocol has many features that distinguish it from other options platforms, which include the following: 

  • Bigger and better capital efficiency through under-collateralization 
  • Low price and speedy transactions thanks to Solana 
  • Hybrid orderbook and AMM model, allowing efficient pricing and deep liquidity 
  • Strong focus on user experience with easy-to-use derivative products

Speed and Scalability

Several on-chain option protocols face one problem: expensive transactions and an extremely long time for settlement, which drives investors away due to an already-moderate risk level. But with the help of Solana, Zeta has been able to tackle this problem effectively. The options protocol offers a high transaction throughput of 50,000 per second, low fees of less than $0.01, and a fast settlement time of 400ms block time. This makes the fees paid and time spent on the trades almost negligible, which means users have one less roadblock to making a profit.


Roadmap 

Source

The Zeta Roadmap has a lot of planned milestones for the rest of 2021. By the end of the year, Zeta will have entered their v2 Mainnet, integrated their AMM and LPs, as well as deploying staking and governance of their native $ZETA token across the platform. The full slate of plans is detailed in the above photo.


About Zeta 

Source

Zeta is the premier under-collateralized DeFi options platform built on Solana that provides liquid derivatives trading to individuals and institutions. 


Final Thoughts 

The Solana ecosystem has supported so many successful DeFi projects like Serum, allowing users to leverage their proven on-chain orderbook. Solana has also boosted other successful protocols like Raydium and Mango Markets. With Zeta receiving a grant from EcoSerum, it adds to the reputation of Solana as a builder-friendly chain that offers scaling solutions unlike any other network.

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Utulu Hope

UC Hope is a passionate fan of crypto who could weave the latest event into sparks of inspiration and information. He leaves no stone unturned to get to the core of a story. Aside from writing, he spends his hours poring over algorithms and protocols, preparing for a future career as a computer programmer.