Ribbon Vaults On Aevo

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Ribbon Vaults On Aevo
Aevo
0x28B3
October 10th, 2023
130
Mint
Since the inception of Aevo, our goal was to build a unified options product that combined the simplicity of the Ribbon DOVs with the flexibility of an exchange. Today, we are finally making that a reality — we will be transitioning the Ribbon Vaults to settle on Aevo, over the next month.

New Auction Flow

Going forward, the weekly Ribbon Auction will be held on Aevo’s new RFQ platform. Just like before, participants will submit bids in an auction, and need to pre-fund their account with USDC to participate.
Once the auction is settled and the top bid is selected, the premiums will get bridged back from Aevo L2 to Ethereum Mainnet (and sold into WETH or WBTC if the base asset is not USDC), then sent into the Vault contract.

Aevo RFQ UI

Benefits for Market Makers

Currently, market makers who participate in the Ribbon Vault Auction buy options tokens from our vaults on Ethereum Mainnet. Since there is no secondary market for these tokens, most of the market makers hold them till expiry.
In this new paradigm, the options that the Market Makers buy are fungible with other listed instruments on Aevo Exchange. This means that they can re-trade it, use it as margin to trade other things, and even delta hedge their positions by trading the perpetual. The fungibility of Ribbon Vault Options with Aevo listed options and margin system makes us the best and most complete venue for options trading in all of DeFi.

Benefits for Users

Currently, Ribbon Vaults use Paradigm to facilitate the Ribbon Auctions every week. As part of this process, a portion of the yield is deducted to pay for the Paradigm fee, which is currently ~4bps. By facilitating the auction process on Aevo instead, it will be a fee-less process and the fee that would have gone to Paradigm would go directly to users instead = more yield.
Secondly, Ribbon Auctions used to be a permissioned process where only whitelisted accounts could participate. Going forward, this will be a completely permissionless process that anyone can participate in. To get notified about the auctions, join this TG channel.

Conclusion

Ribbon Theta Vaults currently sit on $20m of TVL and sell >$10m of ETH and BTC options every week. Going forward, this volume will be reflected directly on Aevo.
This will finally unify the vault and exchange products that have always been separate, and further cement Aevo’s position as the #1 venue for options trading in all of DeFi.