1/š§µ Pricing options in TradFi is easy. In DeFi? Not so much.
Letās break down why pricing an option on-chain is a real challengeāand how kibo
solving it like no one else.š
2/ The Order Book Way š
In TradFi, order books are the standard. They mirror real-time market demand.
But on-chain? Order books become costly in storage & computational resourcesāand blockchains arenāt built to handle those frequent updates.
3/ Thatās why DeFi turned to AMMs š¤
Automated Market Makers avoid storing every order by using formulas to calculate price based on liquidity pools.
Great for tokens. But options? Much more complex.
4/ Enter Option Pricing Models š
TradFi uses models like Black-Scholesāfactoring in spot price, strike, time to expiry, and implied volatility.
These models are:
āŖļø Expensive to compute
āŖļø Hard to run on-chain
āŖļø Dependent on off-chain data
5/ And thatās the problem š
Smart contracts on blockchains like Ethereum have gas limits. They canāt handle heavy computations like Black-Scholes.
Worse: Most required data (spot price, volatility) lives off-chain.
6/ Oracles help, butā¦ š§
Oracles can pull off-chain data on-chain, but theyāre not always reliable or decentralized.
Even off-chain, implied volatility can be hard to calculate if the option doesnāt have an existing market.
So how does kibo fix this?
7/ Kiboās breakthrough š”
Kibo built a 3D implied volatility surface that:
āļø Lives fully on-chain
āļø Updates after every trade
āļø Maintains a vega-neutral state
āļø Doesnāt rely on oracles
This is a first in DeFi options.
8/ Why this matters š„
This means fair, accurate, and decentralized pricing for DeFi optionsāno off-chain hacks, no oracle dependency.
True decentralization. Real innovation.
9/ In a space where most DeFi options projects still struggle with fair pricing, @KiboProtocol is setting a new standard.
And theyāre just getting started.
10/ Want to see the future of on-chain options?
š Dive into Kibo:
Follow @KiboProtocol
& stay tuned as we cover position management next š
#DeFi #Options #Kibo #Crypto #Web3 #Trading
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