Decentralized finance (DeFi) was one of the emerging sectors of the crypto market in 2021 and is poised to continue facilitating the mass adoption of cryptocurrencies in 2022. This comes as institutional and retail investors embrace the rise of finance 2.0.
One DeFi project that has started the year off to a bullish start is Ribbon Finance (RBN), a protocol that uses financial engineering to create structured products such as automated option strategies. These are designed to provide users with sustainable returns over time.
Data of Cointelegraph Markets Pro and TradingView show that since trading at a low of $1.83 on Dec 30, the RBN price rose 146% to hit a daily high of $4.50 on Dec. January 3, as its 24-hour trading volume skyrocketed to USD 60.6 million.
Three reasons for the RBN construction push include the launch of Ribbon Finance V2 , the addition of new blockchain networks to the Ribbon Finance ecosystem and an increase in the total value locked in the protocol.
Ribbon V2 Release
One of the biggest developments that has helped drive price growth in RBN has been the launch of Ribbon V2. Originally announced in August 2021, the project has been slowly migrating liquidity and building its pools while testing new features.
Reminder to migrate your positions by Friday from V1 to V2 to be eligible for this week’s yield!
You will be levied exit fees if you withdraw your funds from V1, but migrating from V1 -> V2 is fee-free (other than gas fees)
— Ribbon Finance (@ribbonfinance) January 3, 2022
Remember that you must migrate your positions before Friday from V1 to V2 in order to be eligible for this week’s performance.
If you withdraw your funds from V1, Withdrawal fees will be charged, but migration from V1 to V2 is free (excluding gas fees).
The updates Ones that came along with V2 focused on the decentralization of Ribbon vaults. This includes the ability to allow smart contracts to set strike prices for options that the vault sells. Additionally, the creation of an on-chain auction mechanism allows anyone to participate on the opposite side of the vaults instead of just whitelisted market makers.
Ribbon V2 also includes an update to the vault accounting system of the protocol. This involves creating governable vault parameters that allow RBN holders to have a say in determining the strategy each vault implements, as well as the management and performance fees each vault requires.
These new updates should make Ribbon Finance more community owned and also help increase the long-term returns offered.
Ribbon adds support for Avalanche
A second reason for the boost in RBN momentum is the recent addition of support for the Avalanche network (
AVAX). Included is a new AVAX covered call vault where users can deposit AVAX and get 24.18 return % at the time of writing this article.
According to the protocol, the addition of Avalanche support “marks Ribbon’s first step towards a multi-chain future”, which suggests that the project has plans to continue adding support for other networks as time goes on.
At the time of writing, there are 144,320 AVAX locked in the Ribbon Finance protocol for an approximate value of USD 15.3 million.
The total locked value reaches a new maximum
A third sign hinting at the growing strength of Ribbon Finance has been the total value locked in the protocol, which hit a new record of $295.96 million on January 3, according to Defi Llama data.
The most recent significant push to TVL coincided with the addition of support for Avalanche on December 15, 2021, and heralds the possibility of such integrative support for other networks. This could potentially lead to further increases in the future.
In addition to the call vault covered by AVAX, Ribbon Finance currently offers six different automated products on the network Ethereum (ETH), including an Aave covered calling strategy (AAVE), a stETH-collateralized ETH-covered call strategy, a yvUSDC-collateralized ETH put option put strategy, a yvUSDC-collateralized call strategy ETH covered call strategy, a WBTC covered call strategy and an ETH sell sell strategy.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should do your own research when making a decision.
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