Ethereum launched Charm, a decentralized options platform using an automated market maker to create liquidity and reduce user costs.
The developers of the highly experimental decentralized options platform Charm have announced the launch of the mainnet, promising users an innovative way to trade ETH options contracts. The developers’ statement says:
“Charm is a revolutionary automated market maker (AMM) that can create liquid options on the blockchain. By applying the market prediction rule to the options world, we have invented a new model for options creation, pricing, trading and settlement. ”
In traditional finance, options are contracts that give buyers the right, but not the obligation, to buy assets at a specified price at a specified time in the future, for which they pay sellers a “premium”. In the case of Charm, the only currently supported asset is ETH.
According to the statement, several key features set Charm apart from similar platforms. For example, prices are solely determined by supply and demand, so AMM does not rely on external oracles to determine prices. In addition, users can sell their options before they expire.
However, the developers emphasize that Charm is an experimental and unaudited platform. They urge users not to deposit more money than they can afford to lose. The developers warned:
“Charm is an experimental protocol. It is not governed by or subject to laws and regulations that apply to firms, individuals, partnerships, or individual practices. You can lose up to 100% of your money and not receive compensation. Please make sure you study the issue and understand the risks before proceeding with the platform. ”
DeFi projects can bring both great benefits to users and losses. Recall that in December, the Compounder Finance decentralized financing project ceased to exist – its founders raised $ 10.8 million, after which they fled with users’ money.
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