Introducing Buffer Finance 👋
Buffer is the first on-chain peer-to-pool options trading protocol built on Binance Smart Chain
Buffer is a non-custodial on-chain peer-to-pool options trading protocol that works just like an Automated Market Maker (eg: PancakeSwap) where traders can create, buy, and settle options against liquidity pool without the need of a counterparty (option writer). Buffer makes options trading accessible to everyone and much more efficient than its centralized counterpart.
If you do not understand the complexities of derivatives trading but want to be part of the options trading ecosystem on BSC you can do so by following ways:
- Buy and hold our perpetual revenue-sharing token ($BFR), 100% of our present and future settlement fees will be distributed among $BFR holders.
- Become a liquidity provider and earn yield over your WBNB, WETH, and WBTC holdings on Binance Smart Chain. (More BEP-20’s coming soon)
To get updates on when we launch our protocol on Binance Smart Chain , you can join us on discord
Before we dig deeper into our protocol and Tokenomics. We want to make sure you are familiar with our ethos.
- Mission: Even after being a multi-trillion dollar industry derivatives trading is accessible to a select few banks, hedge funds, and HNIs. Our mission is to change that and make it accessible to everyone.
- Community-first: To increase community participation in our protocol we have decided to distribute 100% of the protocol fee among the $BFR token holders and liquidity providers.
- Transparency: All our work is open for public scrutiny including our entire source code and token holding.
- Security: All the smart contracts in the buffer protocol will be audited by multiple renowned audit firms before they are shifted to the BSC chain
- Innovation: Buffer is the only options trading protocol on the BSC chain that offers customizable put and call options against BNB. We experimenting with new ideas and approaches to simplify the usage of the protocol.
- Environment friendly: Transactions over BSC chains are faster and require lesser energy, this reduces transaction costs & the protocol’s carbon footprint. This also allows us to try out more complex protocols which might not be possible with Ethereum mainnet’s gas fee.
How does the protocol work? 🤷
There are three stakeholders involved in the protocol and the process goes as explained below.
- Liquidity providers(LP): LPs provide liquidity for a particular BEP-20 token’s liquidity pool and receive write buffer tokens($rBT) against it. The provided liquidity is used to write both call and put options and the premium paid by the option buyer (strike fee + option fee) is distributed among the $rBT holders as yield.
- Option buyer: An option buyer can set any strike price and buy a put or call option after paying an option premium and a settlement fee (1% of the option amount). The bought options can be exercised anytime before the expiry date directly against the liquidity pool.
- Token holders: Buffer protocol has 3 types of tokens and each token has its own utility and benefits.
- $iBFR token: $iBFR is the native token of the buffer protocol — $iBFR can be staked to farm $BFR tokens or sold against regular buybacks.
- $BFR token: $BFR token is the perpetual revenue-earning uncapped token and its price increases with token supply. $BFR holders get 100% of the settlement fee and reflection rewards on buy and sell.
- $rBFR token: Write $rBFR tokens are issued to the liquidity providers. $rBFR tokens holders earn yield over the provided liquidity, or they can stake $rBFR tokens to farm $iBFR tokens.
We will be releasing mire derailed articles on each token separately to help you better understand what role they play in the protocol
- Strike fee: This is the Intrinsic value to be paid for in the money options
- Option premium: This price is the time value calculated based on the underlying asset price volatility, type, and duration of the option being bought.
- Settlement fee: 1% of the total amount being covered under the option has to be paid as a settlement fee.
More on our option pricing will be released in later articles.
Total option fee to be paid by option buyer is Strike fee + Option fee + Settlement fee out of which Strike fee and Option fee is paid out as yield to LPs and Settlement fee is funneled to $BFR holders
If you are new to options trading you can read more about it here
Benefits of the protocol 🦾🦾🦾
- Non-custodial: All the liquidity is auto managed by an immutable smart contract
- Bidirectional liquidity pools: One pool to write both put and call options no separate USDT and BEP-20 pools required
- Trustless: On-chain trustless settlement for each contract (Fully decentralized)
- American style options: Can be exercised anytime before expiry
- Customizable: Option buyer can choose any strike price
- Zero liquidity risk: Locked liquidity for each option removes counterparty and liquidity risks for option buyers
- No-censorship: No-KYC or registration required
- Yield-farming: Earn yield over any BEP-20 token (Starting with WBNB, WETH, and WBTC)
- Diversification for liquidity provider: Diversify risk by a single liquidity pool for both call and put options
Launchpads & IDO: BNB price fluctuations during the fundraising period can significantly affect the project’s fund target and future success. Launchpads or projects can buy put options to hedge the risk.
Service Providers: Service providers like blogs, influencers, and tools like Dxsale who accept payments in BNB can buy put options to avoid loss caused due to price fluctuations.
Speculators: Speculators can buy call options if they are expecting a sudden increase in BNB price or buy put they are expecting a sudden drop in BNB price
Traders: Traders can buy a put option if they have an open long position on BNB or buy a call option if they have an open short position on BNB
- Incentivized testnet release for BNB options
- Airdrop campaign release
- $iBFR token locking and vesting contract
- $iBFR pre-sale
- $iBFR public Sale
- Contract audit
- $iBFR staking pool setup
- Mainnet Release for trading options on BNB
- Phase-2 reward announcement
- WETH options and liquidity pool setup
- WBTC options and liquidity pool setup
- $iBFR burn/buy back announcement
- Open place to suggest BEP-20 tokens
- Secondary market for option trading
- Release on other chains
- Options strategy builder