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Case Study

On-Chain Options Efficiency Engine

Revolutionizing Decentralized Options Trading

60-75% collateral reduction98% back-test win rate333% simulated ROI
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Capital Efficiency
60–75%
lower collateral per trade
Win Rate
98–99%
strategy win rate in back-tests
ROI Performance
333%
simulated ROI (annualized)
TAM Unlocked
$20B+
traditional TAM unlocked

The Challenge

Traditional options markets process $20B+ in daily volume, yet on-chain options captured < 0.1% of that flow. Why? Rigid 1:1 collateral rules locked up 3–5× more capital than risk required, fragmenting liquidity and stalling adoption.

Our Approach

Updoot engineered an Options Efficiency Engine—a hybrid risk-pricing stack that:

  1. 1.Posts collateral against real-time option value, not nominal exposure.
  2. 2.Runs autonomous AMM strategies that price volatility without external oracles, slashing manipulation vectors.
  3. 3.Aggregates liquidity across chains, routing order flow to the best pool automatically.

This R&D loop delivered institutional-grade capital efficiency while keeping protocol security intact.

Solution Architecture

1

Liquidity Hub

Solidity core that federates pools across EVM chains and routes orders to the lowest-slippage venue.

2

Collateralization Engine

Dynamic risk models adjusting collateral in milliseconds based on spot price, moneyness, and historical vol.

3

Autonomous AMMs

Volatility-range, hybrid, and 0DTE market-maker bots (Python + Web3) operating without implied-volatility feeds.

Business Impact

  • Capital Freed — traders post up to 75% less collateral, unlocking complex strategies once reserved for CeFi desks.
  • Liquidity Deepened — pooled depth rises as idle capital re-deploys; spreads tighten, attracting market-makers.
  • TAM Expansion — on-chain options volume can 10× without new capital, narrowing the CeFi/DeFi gap.
  • Protocol Revenue — fee model projects $16.8K per $1M options minted, scalable across chains.
“Updoot turned the collateral problem on its head—capital efficiency went from deal-breaker to differentiator.”
— Lead Quant, confidential options initiative

What This Means for You

If you run a DEX, derivative venue, or any capital-intensive DeFi product, Updoot's efficiency-first protocol design framework can unlock dormant liquidity, lower user barriers, and capture a far larger slice of a multi-billion-dollar market.

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