Arrow Market is the next generation option automated market maker and decentralized settlement system where participants can trade options using arrows with two different option recommendation system and contribute to the insurance pool as a Liquidity provider. The middle man is cut out and staking the HFTs would make in tridfy.
.png)
The Arrow Platform
The platform works by coupling a decentralized aggregate counterparty (DAC) - responsible for settlement - with an option factory. Coupling the DAC with its option factory gives us a decentralized financial market (DFM). The DAC and the option factory can run on Ethereum Virtual Machine (EVM) compatible blockchains.
Option prices on the Arrow platform are quoted by a contingent claims automatic market maker (CCAMM), allowing users to buy or sell options without the need to be matched with other market participants. The Arrow CCAMMs make use of off-chain resources, allowing for more sophisticated forecasting and pricing computations than can be done on-chain.
Two Pool Structure
A two pool system raises the foundation for arrows option creation and settlement function.
The first pool sets the net premium from trading and the collateral from riders. The Automated Market Maker sets prises and the trading pool liabilities are dimensionally hedge an automated hedging engine.
The second pool is an insurance pool, where insurance providers are compensated with the residuals from the trading pool plus transaction fees.
Tokenomics
Owning the arrow tokens will give more access to insurance pool where they could be liquidity providers. The first two years 40% of tokens total supply will be distributed to the LPs. The token holders will also be able to participate in DAO voting which is responsible for updating pricing mechanism.
Final Thought
Arrow’s technology will enable the next generation of derivatives markets by delivering decentralized options creation and settlement to Avalanche. Avalanche is the natural base layer for Arrow because of high throughput, near-instant finality, near-zero transaction fees, and front-runner resistance, all of which are enabled by its unique random-sampling consensus algorithm.