AOTP Infrastructure

Options sellers become the market makers by staking assets into the Shared Collateral Asset Liquidity Pool. AOTP will then place the capital to multiple DeFi lending platforms by distributing certain proportions to lending and loaning through a yield farming aggregator. After lending stable currency and obtaining income from interest rate differentials, part of stable currency is reserved for seller withdrawal, and the remaining will be used for dynamic hedging and settlement with buyers.

Asteria’s hedging engine is also based on an aggregated trading mechanism. Which dynamically adjusts positions in the three principal trading markets: spot, perpetual swaps, and options, thereby avoiding the systematic risks of reliance on a single market and significantly improving the capital efficiency.

Options buyers can freely choose various options provided by Asteria and set different option parameters. Asteria’s hedging engine will dynamically calculate the premium through the B-S model. Based on the available hedging capital, which is the maximum liquidity provided, the maximum sellable quantity is quoted by the option buyer. After transaction completion, the hedging engine will determine whether to adjust the underlying holdings based on the change of buyers’ net position collectively.

The AOTP system ensures that buyers can obtain sufficient and customizable option products, instantaneously get fair prices and non-slippage transactions, and guarantees sellers/market makers the highest possible profit rate from yield farming on lending protocols and premiums from buyers.

Pricing Engine: Depending on the specific option structure a different pricing function is implemented. The basis of these functions is sound mathematical models that offer a dyadic quotation. The quotation consists of both the price and the maximum tradable size contingent on the customized option contract selected on the buy side.

API3 Integration: To receive API3 first-party data which is governed by the DAO. This ensures the underlying market price feed is fair and manipulation has been prevented. As an API3 Airnode complicated calculations can be executed to provide the Implied Volatility industrial indicator.

Delta Hedging Aggregator: Delta Neutral Hedging on the holding for option market making. Dynamic adjustment based on the volatility of the underlying asset and the liquidity in multiple markets.

Yield Aggregator: To increase capital efficiency for the buy side and increase profit for liquidity providers. Through a dynamic allocation of market making capital to create the optimal scenario drawing on various DeFi yield protocols and hedging pools.

NFT: NFT represents the LPs’ revenue for option sellers; rights of exercising option and possibility of options synthesis for option buyers. NFT also identifies the mining power for platform tokens.

Scalable Solution Integrations: Asteria ecosystem would be deployed on state-of-the-art scalable solutions such as Avalanche, Solana, and Metis Layer2, for promoting system scalability and operational efficiency, largely reducing gas cost for users.