Charm Options
Last updated
Last updated
is a breakthrough (AMM) that can create liquid options on the blockchain.
It works by splitting an asset into different options and creating a prediction market for them, so that they can be priced and traded. This results in options markets that are cheaper, more liquid, and more scalable.
Charm Options is unique because:
Options are priced purely by supply and demand and don't rely on Black-Scholes or an approximation formula. This means price discovery can occur naturally and options are cheaper.
All option markets for a given underlying and expiry are , which means trading activity in one market will benefit all the other markets. This means Charm's option markets can support bigger trades and are therefore more liquid.
A also means that liquidity is not fragmented across multiple markets. This means more options markets can be provided for any given amount of liquidity.
In summary, Charm has invented a new type of AMM that can provide a number of unique benefits.
These benefits are described in the next page.