Thetanuts Finance v3 Launches Integrated On-Chain Options Marketplace

Thetanuts Finance has unveiled Thetanuts Finance v3, marking a significant evolution in decentralized options trading by transforming its platform into a fully integrated on-chain options marketplace. Previously focused on DeFi Options Vaults (DOVs), the updated platform now enables users to not only sell options but also buy, borrow, and provide liquidity for a wide range of assets. This shift aims to address the limitations of DOVs, which, while popular among newcomers, have faced criticism for liquidity constraints, market volatility exposure, and a lack of flexibility for long-term strategies [1].

The new iteration introduces a three-component structure: Basic Vaults, a lending market, and Uniswap v3 pools for trading options. Basic Vaults remain central to the ecosystem, allowing users to deposit funds and earn yields by selling options. However, with Thetanuts Finance v3, these vaults now issue LP tokens that can be used across the platform’s new lending and AMM (Automated Market Maker) systems. This innovation allows users to compound yields by depositing vault LP tokens into the lending market or AMM, or to close positions instantly without waiting for epoch ends [1].

The lending and borrowing features, built on Aave and Uniswap’s infrastructure, further diversify user exposure. Users can now choose to short or long options by leveraging the platform’s integrated tools. Short positions are managed via Basic Vaults, while long positions can be achieved through flash loans and AMM trades. This flexibility is a key differentiator from previous DOVs, which were largely one-sided and passive in nature [1].

Another notable addition is the Add Liquidity Module, which optimizes liquidity provision by enabling users to deposit assets into multiple pools simultaneously. Users can now access up to five sources of yield—option premiums, lending interest, AMM trading fees, and potential governance token incentives—depending on their market outlook. For example, a bearish user can deposit assets into both Basic Vaults and Uniswap v3 liquidity pools, while a bullish user may deposit stablecoins like USDC and generate yield from short puts and AMM trading [1].

To facilitate the transition to v3, Thetanuts Finance launched the v3 Incentivized Alpha in December 2023, running on Arbitrum. The program consists of two phases, with Phase 1 focused on traders and Phase 2 on liquidity providers. Participants have shown strong engagement, with over 70,000 applications and $10.4M in TVL reported during Phase 1. The initiative is part of the protocol’s broader effort to decentralize governance and reward community members through a potential airdrop of its governance token, NUTS. While specific airdrop criteria have not been confirmed, the team emphasized that TVL and trading volume will play a key role in determining eligibility [1].

Thetanuts Finance v3 represents a strategic response to the limitations of traditional DOVs and aims to create a more balanced and flexible market for on-chain options. By integrating lending, AMM, and liquidity modules, the platform enhances user control and expands the range of available strategies. The upcoming NUTS token is expected to further decentralize governance and align incentives across the ecosystem.

Source: [1] Thetanuts Finance v3: The Latest Approach to Decentralized Options (https://www.coingecko.com/learn/thetanuts-finance-v3-the-latest-approach-to-decentralized-options)