What is Primitive?

A simple overview of the protocol.

Primitive is an options market protocol live on Ethereum mainnet.

App: https://app.primitive.finance.

Liquidity providers can earn yield on their DAI, ETH, or DeFi tokens through providing liquidity to the respective option markets. Yield is earned through trading fees generated on the supported AMMs (Sushiswap).

Traders can swap their DAI, ETH, or DeFi tokens to the respective Primitive Option tokens, giving them leveraged exposure in either direction. Call options can be purchase for the underlying tokens (ETH, DeFi tokens) to gain upside exposure, while Put options can be purchased for Dai to get downside protection. Short option tokens for both Calls and Puts can also be swapped to directly.

Option Writers can collateralize the options and sell them to earn upfront returns on their DAI, ETH, or DeFi tokens. When options expire, they release the remaining collateral held in the smart contract. In the case of an option expiring out-of-the-money, the initial collateral deposit would be released. In the case that an option is exercised, option writers are entitled to the be paid the strike price of the option (in DAI for Calls and in underlying tokens for Puts). Writing options is the same as buying short option tokens.

What problems does Primitive solve?

In DeFi, the spot and lending markets have grown exponentially, which introduce more market needs:

Missing: Leverage instruments on DeFi tokens.

Missing: Hedging instruments on DeFi tokens.

Missing: Limited impermanent loss pools that generate trading fees from volume.

Primitive fills these holes in the market.