Introduction

Squeeth's mechanism is identical to that of a perpetual swap, except that it uses the ETH2 index instead of the ETH index. Global options-like exposure (pure convexity, pure gamma) without the requirement for either strikes or expiries is provided by this ERC20 token, thereby concentrating most of the options market liquidity.

Long Squeeth (Buy ETH² Position)

Long Squeeth has no liquidations, infinite ETH2 upside, and protected downside. Long Squeeth's convexity (ETH2 payoff) is better than 2x leverage. Squeeth will profit more when ETH rises and lose less when it falls compared to a 2x leveraged position, however financing rates will be higher due to pure convexity. Long Squeeth is funded. Squeeth purchasers receive ETH2. Squeeth buyers have constant gamma exposure, like holding an at-the-money call option. Long Squeeth holders enter the position by acquiring an ERC20 token.

Short Squeeth (Sell ETH² Position)

Short Squeeth shorts ETH2 with ETH. Long Squeeth investors pay traders on this position. Liquidate Squeeth shorts. A user's exposure to ETH price relies on the amount of collateral they've deposited and whether they own or borrowed it with stablecoins. If you short Squeeth, you have constant negative gamma exposure, like selling an at-the-money straddle. This works like a perpetual swap, but targets ETH2. Traders place ETH collateral, mint, and sell Squeeth. If short Squeeth is undercollateralized, it may be liquidated.

Method

In this dashboard the following issues will be addressed:

• How many long vs short option contracts have been bought on opyn?

• What’s their value?

• Has there been any liquidations?

To find the answer for these questions I found following hints on Opyn's Documents:

In Opyn used 2 separate token contracts to tokenize long and short positions: WPowerPerp is a ERC-20 token for wSqueeth, and ShortPowerPerp is an ERC-721 NFT for short positions.

So by this, I used 0xf1B99e3E573A1a9C5E6B2Ce818b617F0E664E86B as 'ERC-20 token for wSqueeth as long positions' and 0xa653e22A963ff0026292Cc8B67941c0ba7863a38 as 'ERC-721 NFT for short positions' in ethereum.core.fact_event_logs and ethereum.core.ez_nft_mints tables, respectively.

So let's look at the results as below.

Analysis

• Average changes in price of $ETH and $osQTH are shown in the above chart.

Daily count of long vs short option contracts have been bought on opyn are shown in the above chart.

Discord:0xHaM☰d#8391

Daily value of long vs short option contracts have been bought on opyn are shown in the above chart.

Daily count of users that long vs short option contracts have been bought on opyn are shown in the above chart.

Daily amount in USD of long vs short option contracts have been bought on opyn are shown in the above chart.

• The momentum for Cumulative Growth on Long position transactions are so greater and sharpen than Short position transactions.

• The momentum for Cumulative Growth of amount in USD on Long position transactions are so greater and sharpen than Short position transactions.

Has there been any liquidations?

Can I be liquidated if I buy Squeeth (go long Squeeth)

• No. Long Squeeth has no liquidations, infinite ETH2 upside, and protected downside. Timing is important because funding is in-kind (as a percentage of the Squeeth holder's position). Due to trader funding, ETH2 exposure will decline over time. Traders should examine the holding term of their long Squeeth position and acknowledge its reward will depend on ETH's daily price movement and in-kind funding during the position's open period.

Can I be liquidated if I sell Squeeth (go short Squeeth)?

• Yes. If short bets on Squeeth fall below the safe collateralization threshold of 150 percent, there is a possibility that the holdings will be liquidated. When shorting Squeeth, the downside risk is capped at the amount of collateral that was utilized to manufacture the cryptocurrency (and sell it). The ratio of collateralization that is recommended for short trades on Squeeth is 200 percent.

Reference:

• https://opyn.gitbook.io/squeeth/resources/squeeth-faq

• https://opyn.gitbook.io/squeeth/resources/squeeth-strategies-faq#can-i-be-liquidated-if-i-buy-squeeth-go-long-squeeth

• https://opyn.gitbook.io/squeeth/contracts/core-contracts

• https://medium.com/opyn/squeeth-primer-a-guide-to-understanding-opyns-implementation-of-squeeth-a0f5e8b95684

Conclusion

• On January 11th, 2022, the highest count of short squeeth transactions took place with 20 tx per day. The maximum count of long position transactions was reached on May 16 with 579 tx per day. 

• On January 11th, 2022, the highest count of users who placed a short squeeth position was placed with 20 users per day. The maximum count of users who placed a long position was reached on May 16, with 629 users per day.

• The momentum for cumulative growth on long position transactions is so much greater and sharper than on short position transactions. That shows over time, tends to place long positions more than place short positions.

• More than 95% of the value of option contracts that have been bought on OPYN belong to long positions versus less than 5% for short positions.