Theta Vaults are live on

When people enter DeFi for the first time, one of the most common questions they ask is “where are the yields coming from?”. A huge driver for high yields comes from the fact that traders are significantly increasing their borrowing for leverage, as we enter a new bull market. Another huge segment of yield comes from new projects distributing their native asset to the community for providing liquidity.

When times are good, these numbers run high — airdrops can be worth over 6-figures and yield numbers can be in the hundreds of percent. …

Ribbon Finance is launching the first on-chain perpetual ETH weekly call-selling product, the Theta Vault. The vault aims to automate the process of selling call options, and compound the premiums to generate high yield on ETH. By depositing funds into this vault, users can save on gas fees and the complexities of rolling their own options strategy. For a more detailed overview of how the product works, read this post.

This post examines an example covered call strategy that we have come up with, and a backtest of how this strategy would have performed over the last year.

Strike Selection

Strike selection…

Most of the yields within the DeFi ecosystem come from some sort of borrow/lend mechanism. Because of this, assets such as ETH or WBTC generally have relatively low yields — there is lots of supply, but very little borrow demand. Most borrowers prefer to borrow a stable asset like USDT or Dai.

Instead of lending, one of the most lucrative ways of earning yield on assets like ETH or WBTC is through option writing strategies. Option writing (selling options) can create enhanced yields (>30% APY) while maintaining exposure to the underlying asset, making it a great way to accumulate a…

Over the last two years, DeFi has seen an incredible amount of innovation. Many teams have rebuilt the core primitives necessary to create a new financial system from scratch — exchange, lending, derivatives, and so on. Each of these new protocols have created new ways for regular people to make money — lending out assets, providing liquidity to an automated market maker, or minting synthetic assets.

This has organically spawned a community of people focused on earning enhanced yields by combining these protocols together in interesting ways, a.k.a “yield hacking”. …

Ribbon Finance

Crypto structured products on Ethereum 🎀

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