Software engineer, Web3 lover, crypto addict.

padaw3n

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How Aave, one of the largest lending platforms, launched a protocol called "Lens Protocol", a permissionless, composable and decentralized social graph that facilitates the creation of a Web3 social platform.


Social network goes 3.0 

Last May 18, Aave, one of the largest lending platforms, launched a protocol called "Lens Protocol", a permissionless, composable and decentralized social graph that facilitates the creation of a Web3 social platform.

It uses existing concepts of social networks and merges them with new Web3 concepts around ownership by implementing NFTs as a core element of the protocol.

The protocol is open source and allows developers to build their own social platforms on top of it.

## What is a social graph?

A social graph is a diagram that illustrates interconnections among people, groups and organizations in a social network. Today all traditional social media like Facebook, Twitter, Instagram are centralized since all of your interactions are hosted in the company’s servers.

So this type of social graph is centralized and private, meaning all users depend on the platform's algorithms and policies and content creators do not truly own anything published on these platforms. There is no portability. Your profile, friends, and content are locked to a specific network and owned by the network operator. If you wanted to leave Facebook today for a competing social network you would need to start building up your social graph from scratch. A herculean task that many are not willing to take upon them.

Lens Protocol corrects this by building a decentralized, non-custodial social graph built on top of the Polygon blockchain that any application can plug into. Rather than being owned by large tech corporations, it is designed to allow creators to own the connections with peers.

![Screen Shot 2022-07-19 at 2.47.31 pm.png](https://cryptotesters-images.s3.eu-central-1.amazonaws.com/Screen_Shot_2022_07_19_at_2_47_31_pm_14b4e27e47.png)

## How do users own a social graph?

NFTs form a crucial element within the protocol, allowing the social graph to be composable and permissionless. Every post, every follow and every “like” is tokenized as an NFT and it is ownership over this NFT that gives you control of your content. Nearly all content within the protocol thereby also becomes “ownable”.

Thanks to an open social graph owned by the user any application can connect and can build a user interface. Each application using Lens benefits the entire ecosystem in that it contributes towards the further development of the social graph. Creators no longer need to worry about losing their content, audience, and livelihood based on the whims of an individual platform's algorithms and policies.

Concretely, what benefits do end-users get? For example, users can switch from one application to another while keeping their content as well as their subscribers. Lastly and perhaps most importantly, Lens Protocol is fully open source and anyone can build their own apps on top of the protocol.

## What features does Lens Protocol have?
Lens has the functions of a traditional social media like having a profile, commenting, resharing a post, and more. Users will own everything, as these key functions are powered by NFTs.

![Untitled (1).png](https://cryptotesters-images.s3.eu-central-1.amazonaws.com/Untitled_1_82051e14d8.png)

## CREATE PROFILE

Profile NFTs are the key element in the protocol. It's ownership over this NFT that gives you control over your content. These dynamic NFTs contain the history of all posts, mirrors, comments, and other content you create. An address can contain multiple profile NFTs, and a profile NFT can even be owned and operated by a DAO through a multisig wallet!

![Untitled (2).png](https://cryptotesters-images.s3.eu-central-1.amazonaws.com/Untitled_2_a69cf72c7b.png)

## POST / COMMENT / MIRROR

Publications are the lifeblood of the Lens Protocol. Profile owners can publish pictures, music, videos or other content stored on either a decentralized protocol such as [IPFS](https://ipfs.io/) or [Arweave](https://www.arweave.org/), or a centralized storage provider like AWS S3.Publications are posted directly to a user's ProfileNFTs.There are three publication types: Post, Comment and Mirror.

**Post** is the standard publication type, akin to a regular post on traditional social media platforms. A post is composed of a collection module and a reference module. The collection module contains the logic that allows other users to mint the publication in an NFT. The reference module contains the logic that determines who can comment and mirror the publication.

![Untitled (3).png](https://cryptotesters-images.s3.eu-central-1.amazonaws.com/Untitled_3_a2f4520fee.png)
![Untitled (4).png](https://cryptotesters-images.s3.eu-central-1.amazonaws.com/Untitled_4_413a15cb07.png)

**Comment** is a publication type that points back to another publication, whether it be a post, comment or mirror, akin to a regular comment on traditional social media.  Like publications, comments live in the user's Profile NFT and therefore are wholly owned by the user. A comment can have a reference module conditions. As comments are linked to a publication they are subject to the original publication's Reference Module conditions. For example a publication may have a referral module that limits comments to only those accounts that follow the author of the original publication.

![Untitled (5).png](https://cryptotesters-images.s3.eu-central-1.amazonaws.com/Untitled_5_15bc4263cb.png)

**Mirror** is a publication type that points to another publication. It’s like retweeting on twitter. They also are subject to the terms of the original publication's reference module. Like comments a publication can for example have a reference module that limits the mirrors to the accounts that follow the original poster.

## FOLLOW / COLLECT

Lens offers two types of Profile Interactions.
![Untitled (6).png](https://cryptotesters-images.s3.eu-central-1.amazonaws.com/Untitled_6_0b7e8837d5.png)

**Follow NFT** – When you follow someone, you’re granted a follow NFT. Each of these NFTs has a unique token ID that comes with innate rarity & utility. Example : The first 1000 followers have one vote each or a profile could attach a follow module that requires a user to pay 5 MATIC to receive a Follow NFT.

These are NFTs with integrated voting and delegation capability. They have built-in governance capabilities, such as vote delegation, to allow for the creation of Social DAOs using Lens Protocol. These unique traits can be used to limit voting to your most loyal fans in governance. Of course, like other NFTs they can also be sold and transferred on an open-market.
![Untitled (7).png](https://cryptotesters-images.s3.eu-central-1.amazonaws.com/Untitled_7_b1674a4f43.png)

**Collect **- Like what you see? You can collect publications from people you follow. A new form of self-expression, curate your collection, and show off what you love. This collect feature enables anyone to collect your content based on the price, size, and time limit you set ! So collects allow creators to monetize their content. Creators can also make their collect modules to add even more functionality!

## Lens developer garden:

You can Explore the developer garden where you can learn more about the key features of the protocol and how they work: [text](https://l.messenger.com/l.php?u=http%3A%2F%2Flens.dev%2Fgarden&h=AT0h5R2fDWPT9yuu9pO5KF7IpviEnb3J0mZLCAgoGZ2JCiffiDnN6KS9r2Bkg5S7XocDlzp5nCadjj2xZqVrPnRvv6ylwbDrwEhaVBDNW4Z_tASP_ussT5wF_lTMZvQSOag)

## Garden is growing

There are already some application running on lens protocol like:

[LensFrens](https://www.lensfrens.xyz/): Discover and follow other lens profiles based on similar Web3 footprint.
[Lenster](https://lenster.xyz/): Lenster is a decentralized, and permissionless social media app.
[Phaver](https://phaver.com/): Share-to-earn decentralized social app for the most interesting feed on your phone
[Alps Finance](https://app.alps.finance/#/login): Decentralized social trading network. Build your DeFi investing community and reputation today!
[Refract](https://refract.withlens.app/): Your crypto-friendly link board. Discover new projects, highlight interesting articles and share new ideas.

[Here](https://lens.xyz/#apps) you can find more apps powered by lens. 

![new.jpeg](https://cryptotesters-images.s3.eu-central-1.amazonaws.com/new_53787b2c20.jpeg)

## Conclusion

Lens Protocol seeks to solve the major problems of existing social networks like centralization of data and missing portability of profiles, followers and content. It takes the basic functionality of a social network but brings in lots of new cool stuff. In particular new ways for creators to monetize content and communities to rally together. Imagine every sub-reddit and every Twitter community was a DAO with native coordination tools at disposal, that’s Lens in a nutshell. Developers also seem to love it. With all these new features Lens protocol has nothing to envy traditional social networks, on the contrary it’s only getting started and has its best days ahead.

## Sources: 
[https://medium.com/@bitsnbyte/lens-protocol-the-decentralized-social-media-platform-73461dd332fe](https://medium.com/@bitsnbyte/lens-protocol-the-decentralized-social-media-platform-73461dd332fe)
[https://tokenizedhq.com/lens-protocol/](https://tokenizedhq.com/lens-protocol/)
[https://github.com/aave/lens-protocol](https://github.com/aave/lens-protocol)
[https://mirror.xyz/lensprotocol.eth/YG9iFIs2emVFRtj3JqY95Dk6opNqM0aC9YoM-Ppp5as](https://mirror.xyz/lensprotocol.eth/YG9iFIs2emVFRtj3JqY95Dk6opNqM0aC9YoM-Ppp5as)
[https://docs.lens.xyz/docs](https://docs.lens.xyz/docs)


@rosstothefuture

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How web3 technology will benefit the betting industry

Azuro Protocol: Can the betting industry benefit from web3 technology?

Azuro has recently announced the mainnet launch of their decentralized betting protocol on Gnosis Chain and the first frontend [bookmaker.XYZ](https://bookmaker.xyz) has connected to the protocol, but with hundreds of new web3 projects popping up every week, why is this news important?

Betting today is broken and is built on negative incentives that put the bookmakers and players at odds with each other. It is common in the betting industry for players to be treated unfairly by having their accounts restricted or winnings withheld for winning too often. Bookmakers go to great lengths to ensure they have the upper hand over the players and use extensive cumbersome KYC procedures in an attempt to delay or refuse large withdrawals. With no single overarching governing body to protect the players, they are often left without a solution and often have to reach out to 3rd party mediators for dispute resolution. 

In the same way DeFi disrupted traditional finance, Azuro aims to decentralize and democratize the betting industry. The use of smart contracts creates a level playing field for both players and bookmakers and allows for a trustless, transparent, and permissionless betting experience that is simply not possible in web2. 

Previous efforts have been made by reputable web 3 projects to build on-chain betting, but all attempts have failed to reach a critical level of adoption up to this point.

## The Past
In 2015 Augur, a decentralized prediction market, became the 1st ever ICO on Ethereum selling 8.8 million REP coins and raising over $5.5 million. This was an exciting time for blockchain and the betting industry but sadly the hype was short-lived as the project subsequently failed to deliver a quality user experience (UX). 

Even after 5 years of working on improving the UX, they had still not managed to design a solution that could scale. 

This led to other teams such as Polymarket having a crack at prediction markets by trying a different approach as well as pivoting away from sports betting to focus on politics or cryptocurrency-related outcomes. However, none of these projects really managed to deliver a compelling product, provide a good UX and attract enough users to their platforms. Stefan George the co-founder of Gnosis and investor in Azuro summarized it well:

“Early projects like Augur, Gnosis, and Polymarket lacked a critical understanding of sports betting, which is still the biggest market for applying the solutions that these teams were building.”

**A hybrid team of sports betting veterans and Web3 pioneers**

The Azuro team has a history of working directly in the traditional betting industry with experience in online betting, sports media, and gambling industry payments. The wealth of knowledge that the team brings to the project is unparalleled and will be key to the success of the protocol. Spotting the differences between early Web3 prediction markets and a  traditional sportsbook led the team to rethink the current peer-to-peer design and come up with something radically new.

The main problem with a peer-to-peer design stems from the fact that you are reliant on market makers to create the market, price the market, and seed initial liquidity before there is anything for players to bet on. The design is inefficient and leads to little to no markets & a lack of liquidity behind them. Prediction markets currently are closer to betting exchanges such as Betfair, which although popular with bettors, betting exchanges make up only ~1% of the total market with the majority favouring sports books.

## The Present
Azuro took inspiration from the AMM architecture used by DEXs (such as UniSwap) and adopted their peer-to-pool approach. This design can scale easily and allow for virtually an unlimited amount of liquid betting markets at any point in time. This also meant that the role of the market maker could now be split up into two separate roles: 

1. A Liquidity Provider, who seeds the initial liquidity behind the markets

2. A Market Creator, which is a combination of Odds Feed Providers and Oracles that create markets & price markets.

Unfortunately, due to the specific use case, Azuro couldn’t simply use an existing AMM design. One of the key issues with a Classic Liquidity Pool (as utilized in e.g. Uniswap V2 and V3) is that it requires the existence of two assets X and Y in the pool at all times. 

With Azuro, it would not be this straightforward, as that clarity doesn't exist in sports betting where the liquidity in the pool gets allocated to multiple betting markets, and until those are resolved — it is unclear what amount of $ they will return to the pool. Therefore, they needed a design that could handle a more complex requirement for liquidity provision, which led to the creation of an all-new liquidity pool design – [The Liquidity Tree](https://azuroprotocol.medium.com/introducing-azuros-liquidity-tree-a-new-liquidity-pool-design-for-specialized-prediction-markets-625d68be4727).

**bookmaker.XYZ The First Truly Decentralized Sportsbook Is Live**
In June 2022 the Azuro protocol was officially deployed on Gnosis Chain, an Ethereum sidechain with 5-second block speed and fees at a fraction of those on Ethereum, with 500 transactions costing approximately $0.1. Shortly after the first betting site  [bookmaker.XYZ](https://bookmaker.xyz/) connected to Azuro.

More details are available [HERE](https://azuroprotocol.medium.com/bookmaker-xyz-the-first-independent-frontend-connected-to-azuro-is-live-2d53799f32e8)

## What NFTs bring to Betting
One of the main problems of previous Web3 prediction markets’ was the lack of traditional betting features such as multipliers/parlays which allow players to add multiple bets to one slip for a larger return. These are one of the most popular types of bets in traditional betting, and other solutions have failed to provide them. 

The current betting UX on prediction markets is much closer to trading than it is to sports betting, where players buy fungible ERC-20 tokens representative of certain outcomes and sell them to realise a profit/loss depending on the result. This of course is not the desired UX and Azuro will use NFTs to provide critical features like accumulator/parlay bets and multiple outcome bets. 

Being able to mint bets as NFTs allows for secondary markets for bets as collectibles, bet cashouts (selling bets to other players before the outcome has been decided), and gamification. Metadata associated with the NFTs can be used to reward players for betting on specific events (think sign-up bonuses), create leaderboards, and also improve liquidity provision for future events/markets.

**Democratizing the Betting Industry**
The Azuro protocol will be managed by a DAO that will soon be opening up to token holders allowing them to vote on future changes to the protocol, including adding new features, how and where to spend the treasury (e.g. how much money is contributed to combatting addictions, supporting education, sports for children, etc.), how problematic markets are resolved (e.g. alleged fixed games or other).

However, the day-to-day management of Azuro is not the main intention of the DAO. Azuro aims to democratize the betting industry and shake off the bad reputation that has come from years of unfair treatment of players. Players and bookmakers are often at loggerheads with each other and with no committee at hand, the resolution is often unjust. The DAO will be at hand to help resolve these matters fairly and unbiasedly.

For the DAO to operate Azuro will be releasing a governance token - $AZUR. Azuro was always intended to be a pure token project to democratize the industry itself through open community ownership and governance and therefore actual, sufficient decentralization.

**Even More, Features Coming To Azuro**
There will be many more developments from Azuro and more updates to the protocol to provide an unrivaled UX. Plus, in the coming years as the team aims to expand beyond sports betting and into the metaverse.

Updates to the protocol will bring a richer betting on-chain experience bridging the gap between traditional UX and decentralized betting by providing accumulator/Parlay Bets, an NFT bets marketplace, additional events & markets, and Live/In-Play Betting.

Azuro aims to be the first to supply the ability for games to provide betting as a key piece in in-game economies by plugging into Azuro and tapping into its liquidity. Furthermore, Azuro’s liquidity pools will soon be open for anyone to lock in their money and become the “house” and earn substantial yields generated from the revenues of the pools (and thus completely uncorrelated to the broader crypto or financial markets).

Azuro is also currently working on an SDK to make building on Azuro as simple as possible for frontends, so the ecosystem can grow to fulfil its mission as the base layer for decentralized betting.

To try out the first betting front-end built on Azuro head to - [bookmaker.XYZ](https://bookmaker.xyz)
Follow the links below to join Azuro’s communities and stay up to date with their progress.

[Twitter](https://twitter.com/azuroprotocol) | [Discord](https://discord.gg/azuro) | [Telegram](https://t.me/azuroprotocol) | [Website](https://bit.ly/39e1qEY)




Kubesqrt

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The Optimism ecosystem is getting a lot of hype at the moment. Polynomial is in a prime position to capitalize on this with their new option vaults.

Polynomial The New DeFi Derivatives Powerhouse Built on Synthetix

Polynomial is one of the new exciting projects having launched on Optimism in recent weeks. So what is it, yet another option protocol or something more?

In short: Polynomial is the first **option-selling vault to use an on-chain AMM to execute strategies**.

In the past, options were used almost exclusively by traditional financial institutions and only accredited investors had access to this opportunity. This excludes most of the retail investors, just think about the WSBets crowd with Robinhood etc. With the emergence of DeFi, projects started democratizing many financial instruments and derivatives like options in particular. First on centralized crypto exchanges and later through on-chain option protocols.

First iterations of option exchanges were focused on just buying and selling options peer-to-peer. This requires some sophistication on behalf of investors as options are more difficult to understand than, for example, your typical yield farm on top of a spot exchange like Uniswap. Nevertheless those yield farms turned out not to be sustainable in the long run, as their yield came mostly from governance token emissions (aka inflation) leading many projects into a downward price spiral over time.

Structured product vaults solve both these problems, producing organic yield and abstracting away the complexity of option trading away for end-users. However, until recently option selling vaults were still in need of a **centralized market maker** buying these options from the vaults ( e.g. Deribit or Binance).


By leveraging Lyra Finance, the first highly liquid and composable option AMM in DeFi, Polynomial was able to build vaults that are easy to access, produce high yields (15-55%) and don’t rely on market makers for liquidity.

For those who want to jump (“ape” in crypto jargon) in this new product, we’ll put together a comprehensive guide, which includes the basic know-how around options and allows you to skip the countless complicated explainers you’ll find online from traditional sources.

## WTF are Options?
If you don’t come from a financial background just like me, options can be quite overwhelming. Let's try to break them down in an easy to understand way. Options are derivatives, financial contracts that - as the name suggests - derive their value from other financial assets.

There are basically two different kinds of options, call options and put options, both of which I will explain later in detail. Options are contracts that allow the holder to buy or sell an asset (in TradFi mostly stocks, in crypto mostly BTC and ETH) at a certain price (which is called strike price) within a predefined time frame (called expiration).

So why would someone want to do that? There are basically two use cases for options:

1. Limit risk exposure. This is basically the objective of option buyers. To hedge the downside (FUD in crypto jargon) of an asset, the investor will buy put options. To hedge the upside (FOMO in crypto jargon) of an asset, the investor will buy call options.

2. Gain additional yield on an asset. An investor can sell options and collect premiums to gain yield on their assets (this can work for both the bullish and bearish outlooks).

This second option is what Polynomial is engaging in to produce yield for its users. It sells options on behalf of depositors.

**Call options**

The option seller (also called writer, owns an asset, for example ETH) gives the option buyer the possibility to acquire at a certain strike price. There can be two possible outcomes:

1. The asset price doesn't reach the predefined strike price until expiration. In that case the option seller can keep their assets and the so-called premium, which is the price paid for the option in the first place. Outcome 1 is called **“out of the money”** (OTM) in financial jargon.

2. The asset price reaches the strike price before expiration. The option buyer can exercise their right (note here they can, but are not obliged to do so, hence the option). The outcome 2 is called “in the money” (ITM). Note that there is a difference between American style options (which can be exercised any time before expiration) and the European style options (which can only be exercised on the expiration date).

![pasted image 0.png](https://cryptotesters-images.s3.eu-central-1.amazonaws.com/pasted_image_0_83bdde3dcf.png)


**Put options**

The option seller (which deposits a collateral, e.g. USD) gives the option buyer the possibility to sell their asset (for example ETH or BTC) at a certain strike price. There are exactly the same possible outcomes of 1) OTM and 2) ITM for put options, as for the call options that we covered above.

![pasted image 0 (1).png](https://cryptotesters-images.s3.eu-central-1.amazonaws.com/pasted_image_0_1_d369e5fbf6.png)


**Risks**

Option sellers are exposed to multiple risks. Options are complicated and selecting the correct strike price can be quite difficult. The most obvious risk for the seller is to miss out on possible upside. Option buyers on the other hand only face the risk of losing the premium they have paid in case their option expires worthless.

## How does Polynomial finance work?

Polynomial Finance uses derivatives to create products that automate various yield generating  strategies. Polynomial Earn Vaults use weekly automated covered calls/put sells to generate yield from premiums and compound it by reinvesting the yield back into the vault every week. At the moment, Polynomial offers two different products that allows the users to generate yield on ETH and USD deposits respectively.

![pasted image 0 (2).png](https://cryptotesters-images.s3.eu-central-1.amazonaws.com/pasted_image_0_2_b8f539c329.png)

**Covered call**

A [covered call](https://www.investopedia.com/terms/c/coveredcall.asp)  sells the right to purchase an asset at a fixed price in the future for a premium. The vault sells the right to purchase your $ETH at a specific [strike price](https://www.investopedia.com/terms/s/strikeprice.asp#:~:text=A%20strike%20price%20is%20a,the%20security%20can%20be%20sold.). The strike price is usually higher than the spot price of $ETH at the time the options are minted (“Out-of-the-Money”). Then, Polynomial executes the trade on Lyra and there are three different ways your trade can go:

1. The options expire below the strike price
 
The vault receives the premium and the ETH back as it is not profitable for the other party to exercise the options.

2. The option expires at the strike price

This situation is similar to option one. The vault will receive the premium from the option and also the ETH back that was initially deposited to collateralize the CALL options.

3. The option expires above the strike price

In this situation the vault receives the premium from the option but they are also required to sell the ETH to the party that purchased the original call option. This means that the difference between the current ETH price and strike price minus the premium is the loss on that particular trade. The math for this scenario looks like this:

Strike Price + Premium - Current ETH price = Loss on trade

In this situation the vault takes a loss and loses some of its principal in $ETH terms. This strategy is perfect for anyone that does not expect to see large spikes in price in a short period of time, as the vault sells options on a weekly basis and selects strike prices that allow for a moderate increase in price.

The ideal market for depositors in this vault is if $ETH goes up moderately week-by-week, so they earn premiums in $ETH while the $ value of their deposits goes up. If however, there is a sharp increase in price one week users may lose some $ETH (they’ll still be up in $ terms though as their $ETH will be worth more).This vault is currently generating yield of up to 36% which is significantly above average for this asset.

To put this in perspective with a practical example, assume investor Bob is confident that the price of Ethereum will increase. Let's assume Bob bought 1 Eth at a price of 3.000 USD and is going to deposit ETH (sETH to be exact) into Polynomial's covered call options vault. Polynomial will then automatically sell Eth call options via Lyra Protocol with a strike price of 3.500 USD and expiration of 1 week. During that week the ETH price goes slightly up but remains below 3.400 USD. Therefore, no call (buy) is triggered and at the end of the week the initial investment of 1 Eth + collected premiums from the options sold are reinvested into the vault (auto compounded). The following week, Polynomial will sell ETH call options with a strike price of 3.600 USD. The following week, ETH price sees an unexpected exceptional increase to 3.900 USD and the option buyers will exercise their call option. In this example Bob incurs a net loss since realized strike price + received premiums are still below the current Eth price.

**Put Selling**


Another strategy that Polynomial offers is a [put selling](https://www.investopedia.com/articles/optioninvestor/10/sell-puts-benefit-any-market.asp) strategy where users deposit USD instead of $ETH. This involves the user agreeing to purchase an asset (in this case ETH) at a given price (strike price) in the future. The vault sells OTM put options and receives a premium for doing so weekly. The option can go in three different ways:


1. The option expires above the strike price
In this scenario, Ethereums price is above the strike price which means that the vault keeps the premium as profit and the original sUSD used to perform the put sell.

2. The option expires at the strike price

This situation is similar to the one in scenario 1, which means that the vault keeps the premium and retains the original input.

3. The option expires below the strike price

In this scenario the vault makes a loss as it is required to purchase ETH at above market rate. In this situation the vault takes a loss and continues to sell weekly covered calls. The math for this scenario looks this:

Strike price - ETH price + premium = Loss on trade

This strategy is ideal for anyone that does not expect the price of ETH to fall sharply in the short-term. In comparison to the covered call strategy this strategy is subject to more risk as the user may end up in a position where they have to purchase ETH at a less favorable price and hence make a loss.

Polynomial charges an annualized management fee of 1% of AUM and a 10% annualized performance fee. The fees are prorated and are charged on a weekly basis with unprofitable weeks being excluded from any fees.

As a practical example: Investor Alice is weary of the current macroeconomic conditions and very pessimistic in regard to the price outlook of Ethereum. Alice deposits 3.000 sUSD into the Polynomial put option vault, since she believes the Eth price will suffer. Polynomial will then automatically sell put options via Lyra Protocol with a strike price of say 2.500 USD and expiration of 1 week. During that week the Eth price goes slightly down but remains above 2.600 USD. Option buyers were not able to exercise their puts and so the premium collected from the options sold are added to the vault collateral. Polynomial will sell from the now increased collateral even more Eth put options on Lyra protocol the week thereafter at a strike price of 2.400 USD. That week unexpected macro events completely destroy investor confidence and crypto assets plummet, Eth drops down below 2.000 USD and put options are exercised. Alice will incur a loss, since the premiums collected will not make up for the negative difference of the current Eth price from the strike price (at which option buyers were able to sell Eth for sUSD).

## How to use Polynomial

Now that we know the basics of options let’s put this into practice and start using Polynomial protocol. As mentioned previously, Polynomial is a structured product that offers two option vaults at the time of the launch, with more to come later. Right now the user gets the possibility to invest in Ethereum covered call vault and in a put selling strategy vault. The user interface is completely straightforward, just navigate to the [Polynomial website](https://earn.polynomial.fi), connect your wallet in the top right corner and login via your web3 browser extension wallet.

![Untitled.png](https://cryptotesters-images.s3.eu-central-1.amazonaws.com/Untitled_b4000ab116.png)


A strategy overview is shown and is explained in simple terms. When selecting a vault, you can browse through the vault's performance, vault transactions and withdrawals and further explanation on risks & fees.

![Untitled (1).png](https://cryptotesters-images.s3.eu-central-1.amazonaws.com/Untitled_1_5d3eb1b982.png)


As a quick side note, Polynomial is built on top of Lyra Protocol which in turn leverages synthetic assets from Synthetix and therefore you will interact with synthetic tokens instead of vanilla $ETH or $USDC. 

To get started, approve the asset you want to deposit (sETH in the case of the covered call or sUSD in the case of the put selling strategy). After the transaction is confirmed, which usually takes just a few seconds on Optimism, click on get sETH and you will be redirected to 1inch exchange in a new browser window or tab.  There might be a pop up warning screen since the synthetic ETH token is not currently enabled on 1inch exchange on Optimism. Click understand and Import token, then swap as you like.

![Untitled (2).png](https://cryptotesters-images.s3.eu-central-1.amazonaws.com/Untitled_2_cd14d9e7a8.png)


Heading back to the Polynomial interface click on preview Deposit and confirm the collateral deposit again in your wallet. 

At this point the user will be able to track their positions in the Portfolio section. The deposited asset is now earning yield. In our opinion, Polynomial was able to abstract away most of the complexities from options and provide the user with an intuitive product and a sleek user interface.

Withdrawals can be requested at any time but keep in mind that Polynomial sells weekly options and therefore the actual withdrawal can only be executed after expiry of the options so you may need to wait for a couple of days before being able to access your funds. If no withdrawal is requested then the deposited collateral and the generated yield go back into the vault and the week after sells even more options, which means the yield is compounded. No user interaction whatsoever is required since everything is managed automatically by the protocol.

## First of its kind

Polynomial has launched on Optimism, a Layer 2 scaling solution on Ethereum. Optimism offers extremely low fees in comparison to Ethereum and allows users with smaller budgets to enter. As well as lowering the barrier to entry, they enable easy access to high yield without the need of complicated strategies on assets that typically have significantly lower APRs. 

In addition to that, Polynomial has no competitors on Optimism and other L2s which gives it a first mover advantage. The only comparable product to Polynomial is Ribbon Finance which found success on Ethereum mainnet offering various strategies and currently expanding to some alt-L1’s like Avalanche and Aurora.

Currently Ribbon holds around $270 million in assets under management and is the largest options vault provider. Polynomial can certainly expand to such levels provided the Layer-2 scaling solutions gain more mainstream adoption and increase their TVL. 

At the time of writing the vaults offered by Polynomial have been completely filled and are currently at 450 sETH in the covered calls vault and 1,500,000 sUSD in the put selling vault. 

## Feeling optimistic about the future

Even though Polynomial has achieved plenty in a short period of time the team is working hard behind the scenes to launch more products and assets. Currently the aim is to increase TVL by opening up the vaults to a higher threshold but in the future the team is looking to expand to various other assets like Bitcoin or Solana and other option strategies such as a [long or short straddle](https://www.investopedia.com/articles/optioninvestor/08/straddle-strategy.asp) which sees the user less exposed. 

Furthermore, Polynomial may eventually decide to expand and explore other L2 protocols. It is believed that the reason that they decided to make Optimism their home is due to the option liquidity that is available on [Lyra](https://www.lyra.finance/). As ecosystems expand it is very possible we will see Polynomial across various different ecosystems such as Arbitrum. The team has mentioned wanting to build an option aggregator several times and wanting to become the best liquidity venue for on-chain options by aggregating liquidity from Lyra, Dopex, Premia, Hegic and many other decentralized exchanges. We’ll see what the future for Polynomial entails but it’s clear that the team is very talented and ready to shake the options space up.





In this episode we talk to Sam Bankman Fried from FTX.
Sam is one of the most well known figures in the crypto space. He's a notorious trader moving billions of dollars on a daily basis. He is so busy that he only sleeps a couple of hours a day on a bean bag next to his desk.

thumbnail_sbf_cover.jpeg

sbf_cover.jpeg

In this episode we talk to Sam Bankman Fried from FTX.
Sam is one of the most well known figures in the crypto space. He's a notorious trader moving billions of dollars on a daily basis. 

Podcast w. Sam Bankman Fried from FTX on Building A Crypto Exchange Powerhouse | Cryptotesters

[Spotify](https://spoti.fi/3t3QE7N), [Apple Podcast](https://apple.co/3vwWXT7), [Google Podcast ](https://bit.ly/3eN4Mxr)

In this episode I talk to Sam Bankman Fried from [FTX](https://ftx.com/#a=cryptotesters).

Sam is one of the most well known figures in the crypto space. He's a notorious trader moving billions of dollars on a daily basis. He is so busy that he only sleeps a couple of hours a day on a bean bag next to his desk.

He recently got a lot of mainstream media attention for donating over $5m dollars to the Joe Biden campaign.

We talk about:

- FTX's fast growth and success reasons
- Plans for Blockfolio and Maps.me
- The FTT token
- Relationship with Binance
- His involvement in the Solana ecosystem

### Sponsors

Thanks to Bitwala and Indexed Finance for sponsoring our podcast!

[Bitwala](https://bitwala.x89scb.net/1xYMd): Get €20 as welcome bonus if you sign-up to their crypto wallet app using our exclusive link: [https://bitwala.x89scb.net/1xYMd](https://bitwala.x89scb.net/1xYMd)

[Indexed.Finance](https://indexed.finance/): allows you to buy passively managed indices for Crypto and DeFi’s hottest markets, passive portfolios at your fingertips.

Sam Bankman Fried from FTX on his Masterplan to Build an Exchange Powerhouse

In this episode we talk to Stephan Ponnet  Founder of AvadoCloud. Avado produces Blockchain Nodes which users can run at home and are extremely easy to set-up.

thumbnail_avado_sponnet.jpeg

avado_sponnet.jpeg

In this episode we talk to Stephan Ponnet  Founder of AvadoCloud. Avado produces Blockchain Nodes which users can run at home and are extremely easy to set-up. Using an Avado device even non-technical people can run nodes in decentralized network and earn crypto tokens for doing so.

Podcast with Stefaan Ponnet, Founder of AvadoCloud | By Cryptotesters

[Spotify](https://spoti.fi/3sz7qeX), [Apple Podcast](https://apple.co/3dxwM8x), [Google Podcast](https://bit.ly/2P40Dw2)

In this episode we talk to Stephan Ponnet Founder of [AvadoCloud](https://ava.do/). Avado produces Blockchain Nodes which users can run at home and are extremely easy to set-up.

Using an Avado device even non-technical people can run nodes in decentralized network and earn crypto tokens for doing so.

In the episode we talk about how he got the idea for Avado, how he built the first prototypes and why he thinks everyone should run their own node. We also walk through the variety of networks that Avado supports and the long-term vision of his project.

### Special Opportunity 
[Metric.exchange](http://metric.exchange/) is holding a trading competition to reward early users for doing swaps and limit orders on their new exchange! Prizes totalling over $50000 equivalent in $METRIC token and DAI.

Thanks to Bitwala and Indexed Finance for sponsoring our podcast!

[Bitwala](https://bitwala.x89scb.net/1xYMd): Get €20 as welcome bonus if you sign-up to their crypto wallet app using our exclusive link: [https://bitwala.x89scb.net/1xYMd](https://bitwala.x89scb.net/1xYMd)

[Indexed](https://indexed.finance/): allows you to buy passively managed indices for Crypto and DeFi’s hottest markets, passive portfolios at your fingertips.



Stefaan Ponnet Founder of AvadoCloud about Democratizing Access to Blockchain Nodes

In this episode we talk to Alex Salnikov, who is the founder of Rarible.com one of the largest NFT marketplaces in the crypto space. We discuss how he got into NFTs, why he thinks that what we’re currently seeing with NFT art is just the tip of the iceberg and why there could be much larger technological disruption ahead, as well as the challenges that Rarible faces and how it intends to tackle them.

thumbnail_rarible_alex.jpeg

rarible_alex.jpeg

In this episode we talk to Alex Salnikov, who is the founder of Rarible.com one of the largest NFT marketplaces in the crypto space. 

Podcast with Alex Salnikov from Rarible.com on NFTs, the Metaverse and the Tokenization of Intellectual Property

[Spotify](https://spoti.fi/3sHilnv), [Apple Podcast](https://apple.co/2OcPFE9), [Breaker](https://www.breaker.audio/cryptotesters/e/84250166)

In this episode we talk to Alex Salnikov, who is the founder of [Rarible.com](https://rarible.com/) one of the largest NFT marketplaces in the crypto space. We discuss how he got into NFTs, why he thinks that what we’re currently seeing with NFT art is just the tip of the iceberg and why there could be much larger technological disruption ahead, as well as the challenges that Rarible faces and how it intends to tackle them.

Thanks to [Bitwala](https://bitwala.x89scb.net/1xYMd ) and [Indexed Finance](https://indexed.finance/) for sponsoring our podcast!

**Bitwala**: Get €20 as welcome bonus if you sign-up to their crypto wallet app using our exclusive link: [https://bitwala.x89scb.net/1xYMd](https://bitwala.x89scb.net/1xYMd ) 

**Indexed**: allows you to buy passively managed indices for Crypto and DeFi’s hottest markets, passive portfolios at your fingertips.






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