Speculation is always a feast, there are always ways to participate, but it is difficult to make stable profits.
The cryptocurrency market has been dominated by friend.tech in the past week.
The media are analyzing and interpreting, KOLs are showing invitation codes, scientists are listening to whether new big accounts are joining, in order to quickly buy shares… and the latecomers are considering whether to enter.
But don’t forget, there is more than one way to enter friend.tech.
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The cryptocurrency market is a market dominated by high volatility. Around speculation itself, wherever there is a hotspot, there are products that provide services by taking advantage of volatility.
Now, you can even go long or short on friend.tech on the chain without directly participating in the download and use of the product.
Two days ago, the on-chain options DEX Aevo announced the addition of the FRIEND-USD trading pair in their product.
Most players may have more contracts open, but fewer options. In fact, the rules of options are simpler: holding options means a right to choose, giving the options buyer the right to buy or sell a certain amount of the underlying asset at an agreed price within a certain period of time.
In other words, you can buy a call option on friend.tech today, and if it really goes up tomorrow, you can get a profit based on factors such as leverage, price increase, and fees.
Friend.tech itself has a speculative meaning, and options on friend.tech have a sense of “speculation above speculation”.
But market data is honest. DefiLlma shows that after Aevo launched this options trading pair, its TVL and capital inflows have seen a decent small increase. Where there is speculation, there is naturally heat.
If someone is bearish on friend.tech, they can also buy a put option to seek profits with leverage. But before that, it is necessary to understand the implementation and operation experience of Aevo’s friend options product.
Friend Index and Product Experience
First, visit https://app.aevo.xyz/perpetual/friend, and directly find the FRIEND-USD trading pair.
On the left side of the interface, you can see the trading options, namely Buy and Sell. The former is a call option, and the latter is a put option.
You can choose to trade at market price or set a limit price according to your preference. Taking limit order trading as an example in the following figure, after setting the price, the number of purchases, and adjusting the leverage, the system will automatically calculate the transaction fees. After clicking confirm, the transaction will be completed.
It is important to note that everything is executed on-chain, so you need to connect your wallet to carry out actual operations. At the same time, the leverage can only be opened up to 2x.
You may be curious, friend.tech only allows bidding on shares of different users, and the prices are also different, so where does the unified price of this FRIEND-USD trading pair come from?
Actually, the price of this option fluctuates and has nothing to do with the buying and selling of shares of friend.tech. The only thing that is relevant is the current total TVL of friend.tech.
Based on the change in total TVL, this option contract has designed a “FRIEND index”.
The specific calculation method is to convert the current TVL value of friend.tech to a value divided by one million. For example, if the current TVL is $5.7M, then the FRIEND index is $5.7, and it changes synchronously with the increase or decrease of TVL.
Essentially, this is a way to leverage the prediction of the rise and fall of friend.tech.
If it becomes hotter, the TVL will naturally increase, and the price corresponding to the FRIEND index will also rise, and vice versa.
So when will the order take effect and calculate profit and loss?
According to Aevo’s design document, the settlement time for different option contracts is at 8:00 am UTC. So if you buy a call option today and the TVL of FRIEND increases at 8:00 am tomorrow, you will make a profit, otherwise you will suffer a loss.
Option data analysis
From the current relevant data on friend.tech options provided by Aevo, we can also see some market sentiment.
First of all, the hourly funding rate shows a negative premium, which means that the bears need to pay funding costs to the bulls. This also means that as of the time of writing, there are more people who are bearish on friend.tech.
However, at the same time, the open interest of the contract is only about $50,000, which to some extent indicates that the amount of funds participating in friend options is not large. Therefore, the above-mentioned bearishness only represents the performance of the people who choose to trade options and may not represent the views of the entire market.
It is also worth noting that the current 24-hour trading volume of options is only about $80,000. Yesterday, this number was $540,000, even exceeding the trading volume of Ethereum options on the Aevo platform.
This also indicates to some extent that the popularity of options for friend.tech may not be sustained. Launching related options products can indeed bring certain traffic, but how to attract users to continue trading options is a more difficult problem.
In addition, looking at the price trend, the FRIEND index price even has scattered breakpoints, which means that there is almost no change in friend.tech’s TVL during certain time intervals. And you may not be able to accurately predict when the TVL will suddenly change, which increases the difficulty for participants to judge whether it will rise or fall. The decrease in trading volume is also reasonable.
Therefore, overall, it is not so easy to profit from the options of friend.tech. It seems that participating in put options all the time just because it feels like short-term speculation is not feasible in the current product.
However, the emergence of such options also reveals the nature of the cryptocurrency market – speculation is always a feast, there are always ways to participate, but it is difficult to find a way to make a stable profit.
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