6SR Options Trading Platform
A system which uses the power of the Stellar decentralized exchange, multi-signature transactions, and smart contracts to provide a safe and secure options trading platform for any asset.
Applications, Tools, Infrastructure
- Provide a secure web application where traders can a) perform options operations (buy/sell open and buy/sell close) and b) exercise in-the-money contracts at any time.
- Develop an usable user interface
- Deploy our own horizon node to handle network requests without risk of throttling
- Do not require users to provide a private key for funding; all assets not held in escrow remain 100% in user control.
- Use Stellar smart contracts and multi-signature to secure escrow accounts.
- A simple management system for the creation of assets, markets, and accounts.
- Long Term Goal: implementation of PUT contracts.
Times given from the receipt of funding ->
- 3 months: A running proof-of-concept that requires private keys and trust of the site owner.
- 6 months: Remove requirement of private keys, giving users 100% control over their owned funds and contracts.
- 9 months: Implementation of multi-signature escrow accounts, giving users control over those accounts after contract expiration.
Options trading is usually reserved for high-dollar exchanges and requires large initial buy-ins. Using Stellar blockchain technology, we can create a system that opens these markets up to the public, provides a secure way of maintaining control over your accounts, and also ensures that contracts are executed only when they should be.
The 6SR Options Trading Platform allows users to trade CALL options on supported assets. Upon expiration, the system automatically assigns options which are in the money. The user also has ability to execute a contract at any time before the expiration. We can accomplish this with Stellar primarily by using multi-transaction operations (then if one fails, they all fail, which is what we want). We also use Stellar asset creation to create the market for each option (e.g. a BTC Call $9000 expiring on 2020-08-31). Options trading involves risk and is not for everyone. With precision and attentiveness, profit is gained. There are many ways to make money trading options on this platform. the simplest one is the same as any other asset: buy low sell high. However, since an option expires at a known date (unlike a stock, for example), extra care must be taken. Here are two other ways to make money in this system:
Receive a type of dividend on owned BTC assets. Normally, people who are long term investors in BTC just get to watch it sit there. Now, by selling out of the money call options, they can receive payments on their balance. The risk is that their BTC is called away, in which case their profit would still exist, but be slightly limited.
Profit from market volatility without the full cost. A user can purchase a contract for a fraction of what it takes to purchase the full asset. For example, a user can purchase 1 in the money call option for one bitcoin for 10 USD. The price of bitcoin often fluctuates 100 USD within a few days. With proper timing, the user could sell it for twice or more what they paid. This is a form of leveraged buying without the risk of loans or margin accounts. The risk is that you have to hold the contract to expiration, because you don't have enough money to purchase the asset. In this case you do lose money, but your loss is limited. With any market, it is likely that some will profit and some will lose. But with this options market, it is at least possible for everyone to profit. We at 6th Street Radio wish you responsible trading, and high profits!
- A bare-bones application is up at https://trade.6thstreetradio.org . The UI is plain HTML and is not responsive. A working UI is one of the goals. Automated user registration is not available for legal reasons.
- Additional information for end users can be found at https://trade.6thstreetradio.org/about.html.
- There is no open source code repository at this time. If we receive community funding, we will open source the project and alter our business case.
Options, sdex, blockchain, trading platform