Ribbon: The Rebirth of Onchain Options?

Over the past year, Ribbon has evolved from a decentralized option vault (“DOV”) provider to a full-blown DeFi ecosystem. In addition to DOVs, Ribbon offers principal-protected yield vaults, unsecured lending, and the recently introduced onchain derivatives exchange, Aevo.

Ribbon was one of the first protocols to provide option solutions and quickly gained popularity. However, as the industry has matured, it has become clear that structured option products carry severe downsides and aren’t reliable as a fully automated strategy. The abovementioned, together with the ongoing bear market, have caused a decline in Ribbon’s TVL and protocol fees, inducing the project to pivot its core offering away from structured option products to Aevo.

Product Offering

Theta Vaults

Theta Vaults are Ribbon’s DOV product, which earn yield from option premiums. The yield derives from the usage of pooled LP capital to sell options to professional market makers in weekly auctions. Depending on the vault, it executes either a covered call or put selling strategy, always far out of the money.