Marquee’s Options Manage Risk in the Crypto Space

The exchange platform’s new generation of on-chain hedges protects investors in ways traditional options can’t.

Options have a long history as position hedging tools. In the age of fintech, though, can they continue to be relevant?

Marquee, a digital asset risk management platform, firmly says it can.

While cryptocurrency futures are already a well-established part of the landscape, the Marquee project recently launched a new blockchain-native breed of options that employs a unique, proprietary algorithm for valuing options that could represent an improvement over legacy pricing models. Marquee is so confident in its options that it makes this commitment: If a loss occurs after placing an order, the platform will provide a 100% subsidy for the loss during the activity period, ensuring a principal-protected trade. The platform provides a $1 million claim reward to protect every user who places their trust in the platform, and has funded a $1 million airdrop to provide rewards and benefits to its community members.

Derivatives landscape

Options are different from futures. While futures contracts obligate the buyer to purchase or sell an asset at a specified future date and price, options give the buyer the right, but not the obligation, to purchase or sell that asset.

Futures are easier to value and tend to be more liquid, making them a more intuitive fit for the crypto space. But options have their use cases as well. One added advantage is that options prices, unlike those of futures, can never go below $0.

Crypto enthusiasts tend to be risk takers, so it should come as no surprise that the futures market would establish itself on the blockchain before options. One source calculates the total futures market open interest for BTC alone at more than $10 billion. In comparison, Marquee estimates the total value locked in DeFi options at only $500 million. While at least seven platforms vigorously trade crypto futures, the majority of all crypto options trade on a single exchange. This gives Marquee the opportunity to fill some market gaps by introducing innovative features that meet investors’ wide-ranging needs.

Marquee options advantages

Marquee generates an NFT insurance contract for the user, which denotes:

• Option start time
• Contract execution price
• Expiry date and time
• Expected payout ratio
• Payout amount
  

These standard terms would be familiar to anyone who has traded options through legacy finance channels. But traditional options have at least three drawbacks that Marquee is seeking to address as finance moves into a DeFi world:

• Overly Complex Product Design, which makes it challenging for many users in the crypto space to get started.
  
• Insufficient Options Liquidity, which results in a poor trading experience for users and hinders user retention.
  
• Inadequate Volume of Options Sellers, which leads to lower profits for sellers. Additionally, the lack of appropriate tools to hedge seller risks prevents the growth in the volume of options sellers.
  

Marquee addresses these challenges through its coin price options. Simplicity is the starting point. The user-friendly interface eliminates the complex designs of traditional options. Users select a period from 1 to 30 days, set their target price, then place their order. Although there are few decision points on Marquee, each one has multiple choices. Marquee offers price insurance for 15 popular cryptocurrencies, and users can hedge both long and short risks with a selection period of 1 to 365 days.

Trade efficiency is another factor Marquee addresses by offering up to 500x leverage, compared to the 120x offered through mainstream platform contract markets.

Options have historically been more expensive than futures, but Marquee is addressing that as well. The platform says its fee rate is 30% to 50% cheaper compared to mainstream options platforms.

Regardless of how the price fluctuates, the option contract will not be liquidated during the set period. This is a significant advantage compared to perpetual contracts, especially since the crypto market is known for its disorderly and frequent price volatility.

Marquee's coin price options can be treated as high-leverage perpetual contracts that will never be liquidated, making them suitable for shorting at highs and going long at lows.

More to come

Marquee has developed an on-chain referral commission mechanism, attracting global key opinion leaders to actively promote the platform, with substantial commissions on offer.

Separately, Marquee is issuing OG Pass, a governance token that extends special rights to holders. The platform is offering an array of promotions – including the $1 million airdrop – to celebrate both the new options model and the new coin.

In addition to its innovative options, Marquee also markets blockchain-native insurance products and annuities, adding a DeFi vibe to what has long been a stodgy corner of traditional finance.

Marquee can be contacted via Telegram or X, formerly Twitter, at @Marquee_fi.