DeFi Options Protocol Opyn Raises $6.7 Million

Key Takeaways

• Opyn has raised $6.7 million in a funding round led by Paradigm. Kain Warwick and Stani Kulechov also backed the DeFi project.
• The options protocol received $2.16 million in a seed round led by Dragonfly Capital last year.
• The team is working on reducing margin requirements, expanding options, and developing an AMM.

Opyn has raised $6.7 million in funding. Paradigm was the main contributor to the options protocol’s Series A funding round. 

Paradigm Backs Opyn

Opyn has raised $6.7 million in a Series A funding round. The cryptoasset investment firm Paradigm led funding for the DeFi options protocol. Other contributors included Dragonfly Capital, which led the seed round, Synthetix founder Kain Warwick, and Aave founder Stani Kulechov.

Opyn co-founder and CEO Zubin Koticha told Crypto Briefing that the $6.7 million sum would go towards “the development and security of the gamma protocol.” The team’s plans involve investing in additional security, which will include audits and bug bounty programs. They’ll also focus specifically on hiring for research and engineering roles.

Koticha said that the funding would ensure that Opyn “[continues] to lead innovation within the DeFi options market and serve the overall DeFi community.” 

Opyn has been working particularly closely with Paradigm’s co-founder and managing partner Matt Huang and research partner Dan Robinson, Koticha said. Huang said that his team was “thrilled to partner” with the project, revealing that they would focus on improving Opyn’s “capital efficiency, AMM-design, and scaling.” 

Paradigm has shared a close working relationship with Opyn, helping with development and key upgrades. 

Opyn Enabling Decentralized Options

Opyn enables decentralized options trading on Ethereum. It lets users place call or put options on assets like ETH, which gives them the right to buy or sell the asset at a set strike price.

Traders use call options in anticipation of an asset rising in price, while put options are typically used to hedge against an asset losing its value. Options are pervasive in the traditional finance world, representing a $300 trillion chunk of the derivatives market. 

Koticha said that for Opyn to make significant progress within the global options market, “success will mean enabling the developer community to build a robust DeFi options ecosystem.” 

Drawing sufficient liquidity is a key point of focus for DeFi protocols like Opyn. Today, there’s around $9.7 million locked in the protocol, according to DeFi Pulse. The most liquid DeFi protocol, MakerDAO, now has $5.6 billion. 

In Opyn, DeFi users can buy and sell options on ERC20 assets as tradable tokens. Though several options protocols have emerged in the DeFi space over the last couple of years, Opyn pioneered the niche. 

In June of last year, Opyn raised $2.16 million in its seed capital round. In addition to Dragonfly, backers included former Coinbase CTO Balaji Srinivasan, Compound founder Robert Leshner, and Version One Ventures. 

Opyn is one of many DeFi projects rumored to follow Uniswap and 1inch by releasing its own governance token. Though Koticha didn’t confirm any token release to Crypto Briefing, he said that Opyn has a community-based ethos, so there could “potentially” be a release in the future. 

The project recently launched a V2 upgrade to its protocol, adding features like option spreads and combos trading, automatic exercise at expiry, and an expanded list of options. 

Koticha says the team will next be focusing on reducing margin requirements for naked options, which will enable users “to create the first-ever partially-collateralized option positions in DeFi, with margining and liquidations built in.” They’ll also expand the list of available options, incentivize developers to build on the protocol, and aim to increase liquidity by building an options-specific automated market maker, ThetaSwap. 

Disclosure: At the time of writing, the author of this feature owned ETH, SNX, and AAVE, as well as an expired oETH call option. They also had exposure to SNX, AAVE, and COMP in a cryptocurrency index. 

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