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SunStorm
@sunstormzz
🔥 Big news last week 🔥 @SmileeFinance's NFT just secured a role in the official @Berachain Discord this morning. 🔥 This is huge – so far, there are only 3 NFT that got this privilege: Honeycomb 🍯 0.33ETH Yeetard 🧸 0.16ETH Smilee 🌈 0.028ETH And hey, let's get to know Smilee Finance ⬇️ – you're going to want to be part of this! 🚀
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SunStorm
@sunstormzz
What is Smilee Finance 🌈 ? @smileeFinance is a decentralized finance (DeFi ) platform focused on leverage option trading, its protocol centered on the use of options contracts, designed to offer strategic financial tools for users in the DeFi space. More about its protocol below ⬇️
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SunStorm
@sunstormzz
What are the options? @smileeFinance basic options contract offers the buyer the opportunity to buy or sell (depending on the type of contract they hold) the underlying asset by a certain date at a certain price. Let’s say Chad buys a Call option (paying the premium) that gives him the right to buy ETH at $2,000 (strike price) by the end of the week (expiration date). At the end of the week, If the ETH price is greater than $2,000, he wins! Chad can buy ETH at $2,000 and sell it at a higher price. However, if the ETH price is less than $2,000, it does not make sense to use his right to buy ETH at $2,000 so he simply loses the premium paid. Note: Premium is the price the buyer of the option pays to the seller of the option to enjoy the right that the option provides. Two important things to notice: - Chad never loses more than the premium (he cannot get liquidated!). - Chad can make big money for a relatively small premium (he enjoys huge leverage!).
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SunStorm
@sunstormzz
What is impermanent loss📉? Impermanent loss happens when the price of a token changes after being deposited in a liquidity pool. It reflects a loss if, at the time of withdrawal, the dollar value of your token is lower than when it was initially deposited. This gives @smileefinance the idea to create a brand-new primitive protocol whereby we decompose Impermanent Loss into options and recompose them to generate any type of volatility payoff so called “impermanent gain” 📈 Therefore, temporary gains enable you to make a directional bet against the price changes that lead to impermanent losses and those options are: Bull 🐮 – Bet on a volatile upward price movement. Bear 🐻 – Bet on a volatile downward price movement. Smile 🌈 – Bet on volatility regardless of the price direction.
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SunStorm
@sunstormzz
The idea presented by @smileefinance 🌈 represents an innovative approach to managing impermanent loss in DeFi. By transforming the concept of impermanent loss into a series of option-based bets, the protocol provides new opportunities for liquidity providers to hedge risks and potentially profit from market volatility. However, as with any financial instrument, it comes with its own set of risks and requires a good understanding of market dynamics. To learn more in detail: https://docs.smilee.finance
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