Risks
Notes can lose money, some years a lot of it. These are the ways.
Notes can lose money, some years a lot of it, in these ways.
Losing years
The pool can lose money over a whole year, and every note loses with it. Deep falls from a high are normal along the way, even in good years.
Better-informed traders
Traders who know more than the pool’s prices win more than the margin covers. Enough of them turn good years into losing ones.
Big jumps
Markets jump further and more often than prices assume. When they do, losing years become far more common.
Wrong prices
If the pool’s prices lag the market or are wrong, fast traders can buy positions the pool has already mispriced, and the pool pays for it. Every position also settles on OptionHouse’s own price, so a wrong price at 08:00 UTC could settle positions wrongly.
A stolen key
A stolen key could sign bad prices. A guardian can pause new positions and revoke the key. Liquidity providers who stay bear what it costs, and those who leave first don’t.
A USDC freeze or depeg
The pool holds one coin, USDC. If USDC were frozen, nothing could move and winners would wait. If it lost its peg, the pool would lose with it.
Code and upgrades
Code can have bugs, and Solana can stop for a while. One key, held by the founder, can upgrade the programs. An upgrade can change how the pool and its positions work.
Take-outs can wait
Winners are paid first, and money open positions may need stays in. In a bad stretch, part of a take-out stays as notes until positions settle.
Returns shrink as the pool grows
There’s no cap on how much the pool raises. More money takes more positions only if traders bring them. Otherwise, the same profit is shared by more notes.
The protocol is paid before liquidity providers
The protocol’s half of the margin is paid win or lose, in losing years too, but never while a winner is waiting. It comes after every trader, and ahead of liquidity providers.
No guarantee
Nothing insures the pool. A note can lose most or all of its value.
Who can hold notes
OptionHouse is not available in the United States, the EU and EEA, or the UK. Notes are transferable tokens. Nothing here is an offer of them.