Settlement on DeVol is fully collateralized over the expected price range for the underlier and works differently than options on traditional exchanges.

After expiration, options show up on the Options Portfolio with a corresponding status of "Payoff". This means that the option is ready for settlement.

In order to finalize settlement, traders need to click on the underlier icon to the very left of the Options Portfolio, and select "Payoff". The completed trade will show up in the Payoff Reports, and funds locked up as β€œcollateral” (if any) are released, adjusted for option payoff.

Settlement via the DeVol AMM may differ from legacy options. Options on DeVol are different from traditional options. DeVol relies on a proprietary AMM and a new financial primitive, the Standard Risk Block, for pricing and settlement. There may be some discrepancy between the settlement amount via the AMM, and the payoff of a traditional option:

  • As long as the underlying ends up within its expected price range (99.9% probability), traders who bought options receive a payment which closely approximates that of a traditional option (slightly more or less). All option payoffs are locked up in the smart contract, so there is no possibility that a trader would not receive what they are owed.

  • In some rare occasions (outlier events with a very low probability -- this is expected to happen less than 0.1% of the time), this discrepancy could be more significant if the underlying ends up outside of its expected range. In these cases, it is possible for the settlement amount to be significantly lower than with a traditional option.

Oracle. The value of the underlier at expiration is derived from an Oracle (Coinbase). This value may differ from that on other decentralised exchanges (DEXs) and centralised exchanges (CEXs), which could potentially impact the settlement amount. Also, the value of the oracle may be in fiat currency. DeVol uses a 1:1 conversion ratio between fiat and the corresponding stablecoin pegged to fiat being used as base currency for settlement. The value provided by the Oracle is final and cannot be reversed. If the Oracle is unavailable for whatever reason, DeVol may use at its sole discretion a reasonable reference to another Oracle for settlement.

Settlement may be delayed. If the Blockchain is down, settlement may be delayed. The option will be settled at the earliest opportunity on the basis of the value from the Oracle at the time of settlement.

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