March 31, 2022: Keeping Up with DAO Jones 💸🤑
Arbitrum Options Platform Joins Curve Wars + Dopex Wars
DAO Jones opened a position in the Curve Wars this week, marking the 24th protocol to join the multifront skirmish.
Jones bills itself as a yield, strategy, and liquidity protocol for options. Ruh roh… options? Aren’t they those risky things that cause even pros to get rekt from time to time? No doubt some users hear “options” and run away just in case they require an IQ test to get access.
Fortunately there’s no explicit IQ test, although they use a de facto IQ screen in that Burgers are sanctioned (aka “protected”) from participating in the token drop.
Options are considered risky because they can expire worthless (-100%), but can also can be worth a lot if they close in the money. High risk, high reward.
Pros like to use options as the building blocks for more advanced financial engineering. In this case, the Dopex protocol is handling the options layer. Jones DAO is building vaults on top of Dopex to make life easier for the casual ape. Jones cites the following three groups of users who may potentially be interested:
Users who don't want to actively manage their options strategies and/or would like to utilise the DAO's option strategists expertise.
Users who would prefer not to lock their assets in Dopex SSOVs for a whole epoch and would like to keep their deposits liquid.
Protocols who want to earn additional yield on their treasury assets without employing treasury management experts.
The specific strategies employed by Jones DAO appears to be automating the process of purchasing options spreads. A single option may be thought of as betting an asset will hit a specific price at a specific time. Spreads involve purchasing options over a wider range of outcomes, with the intent of reducing risk. In this manner, users may enter into Jones vaults without needing an advanced theoretical background.
Of course, it’s never wise to ape into something you don’t understand, so we would recommend you check out the Dopex academy and their comprehensive educational resources for a thorough understanding of on-chain options. (And consult a registered financial advisoooor after making all your own coffee to save money).
A nice advantage of building vaults based on options is that users can stake just one asset into Jones vaults and get exposure to multiple sources of yield. Most DeFi farming strategies require entering into pools that contain pairs of assets, putting users at risk of impermanent loss.
Jones vaults earn yield not just from options strategies, but also have the capability of earning yield from token emissions of the native $JONES token. Like $CRV/veCRV, the $JONES token has a veTokenomics model that allows for locking and earning. Hence you see why the protocol might interested in prepping for the Curve Wars.
The Jones strategy also gives users a bit more flexibility when they enter into a vault. Taking a position directly in Dopex locks your assets for a month. Entering through Jones DAO provides users a fungible jAsset, which can be used elsewhere.
At the moment, they have three vaults available, ETH, gOHM, and DPX.
Wait a second, negative 10% returns? As explained in the article below, options can of course be risky, so changes in strategy or market conditions may cause negative yield. Annualizing short term returns has the effect of exaggerating the losses, but you can still expect returns are likely to fluctuate wildly.
Like its base layer Dopex, Jones DAO is only available on Arbitrum. Running complex strategies costs a lot more gas, so the options could really only attain viability after the efficient L2 launched. If you’re ignoring the ecosystem because it’s not on the mainchain, you’re missing a lot of activity.
In fact, Jones is not just looking to participate in the Curve Wars, but possibly also preparing for a potential Dopex wars, making big acquisitions at this early stage.
The Dopex Wars are becoming interesting in their own right with yet another protocol, PlutusDAO, getting involved.
PlutusDAO is building yet another protocol on Dopex, promising to provide a compatible offering within the ecosystem. PlutusDAO is still early in the launch process, just rounding out their token sale and planning to expand further upon both Dopex and Jones.
Again, we can’t offer financial advice, but perhaps we can ask questions? Do you think that 100x gains are more likely to come from something like Bitcoin which everybody has heard of? Or do you need to go several pages deep into CoinGecko to find something with room to run?
Problem is, the long tail of CoinGecko has a lot of trash, and it’s impossible to thoroughly research a thousand some tokens to see if they actually show promise. Here’s the current ranks and market caps of the tokens we reviewed here:
The incipient Dopex Wars have left several watchers bullish.
Of course, do your own research about the multiple risks involved.
To get started learning a bit more about Jones, check out this thread by founder @FroyoFren
For more on Dopex, the DeFi Education team has a great overview.
What’s that? You are unable or unwilling to pay less than the cost of gas for a big-brained writeup? Perhaps you deserve to be relegated flipping $DOGE on Robinhood...
Disclaimers! Author has exposure to $DPX, $rDPX, no exposure to $JONES or $PLUTUS