What is Siren?

Options are a financial primitive from which one can build many different more complex financial instruments. At their core, options give a trader the choice to buy or sell an asset at a predetermined price at a known time in the future. This is useful for protecting one's self (also known as "hedging") against possible price changes in the asset, as well as speculating on these price changes.

SIREN uses a fully-collateralized approach to writing options. A single MarketsRegistry contract creates and coordinates individual markets. Once a Market contract is created anyone can interact with it in a permissionless manner. The solvency of a position is ensured at all times by the collateral locked in the smart contract.

With SIREN both the long and short side of the contract are tokenized. The buyer’s side (bToken) gives the holder the right to purchase or sell the underlying asset at a predetermined strike price. The seller’s/writer’s side (wToken) allows the holder to withdraw the collateral (if the option was not exercised) or withdraw the exercise payment (if the option was exercised) from the contract after expiration.

Tokenizing both sides of the contract allows SIREN to create secondary markets for both the long and short exposure. Under such a design in order to become a writer one purchases a wToken from the SirenSwap AMM. A writer can also unwind their short exposure by selling the wToken back to the AMM. This streamlines the write-side mechanics by reducing it to essentially purchasing the underlying collateral at a discount — as opposed to a typical design where the writer mints long tokens and has to then sell them in order to realize the premium.

How to use Siren?

More information regarding SIREN is available on their homepage. A fully-featured interface is also available that traders and liquidity providers can use to interfact with the protocol itself here.