The Opium decentralized finance (DeFi) protocol has unveiled a new way to increase returns on Ethereum through highly leveraged exposure.
The synthetic derivatives Opium Network has unveiled a new way of earning returns on Ethereum using leverage through “Turbo ETH” aimed at DeFi investors seeking higher risks.
The protocol added that it has responded to a number of requests for less conservative products for Ethereum derivatives.
Turbo ETH will allow investors to buy a short expiry position that gives a highly leveraged exposure to the underlying asset.
“You buy Turbo for the fixed price, and if the underlying asset goes above specified strike price, you’ll have an upside — you’ll earn a high return within a short period, usually a day.”
10x-30x Leveraging on ETH
Leveraged derivatives are fantastic when prices are going up but can be painful if markets turn south. However, the Turbo ETH product only entails losses of the ‘Turbo’ itself, not the Ethereum it is tracking.
As an example, ETH is trading at $2,400 and a Turbo is purchased at $66 at a strike price of $2,500. There will be a 10x to 30x leverage on the difference above the strike price so if ETH closes the day at $2,600 ($100 above the strike price), the Turbo will be burned and payout $100. The higher the asset’s closing price above the strike price, the higher the Turbo payout.
On the downside, if the price of ETH closes below the strike price the Turbo will be burnt and there will be no payout resulting in only the loss of the cost of the Turbo.
Opium also announced a new liquidity pool formed by stakers to cover the Turbo products. Users stake ETH into the pool to cover mining of Turbos, receiving the fees from the Turbo purchasers (costs of Turbo) in return. There are additional rewards in the daily appreciation of ETH up to 3%, while gains over 3% go to the Turbo purchasers.
The final part of the announcement was that Opium has gone live on the Polygon network to improve transaction times and costs. Stablecoin protocol mStable also announced a launch on Polygon today.
OPIUM price update
Opium’s native token of the same name has made 4.5% on the day to reach $7.63 according to CoinGecko. OPIUM hit an all-time high of $23 on Feb. 4 but has yet to get anywhere near those heights since.
DeFiPulse is reporting current TVL at $4.4 million, half of its $9 million peak in late February.
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