Ribbon employs financial engineering to develop structured products with long-term returns. Ribbon’s first offering is an automated options strategy that focuses on yield. Developers can also use the protocol to generate arbitrary structured products by merging different DeFi derivatives.
Structured products are packaged financial instruments that employ a variety of derivatives to achieve a specific risk-return goal, such as betting on volatility, increasing returns, or protecting principal.
Theta Vault is a brand-new product that automates a covered call strategy for high ETH yield. The vault employs a covered call strategy, in which it sells out-of-the-money call options on a weekly basis in order to generate income.
The main danger of pursuing this method is that depositors may be willing to forego upside in exchange for a guaranteed return. Users who sell call options are essentially pledging to sell the asset at the strike price, even if it rises above it (a.k.a selling early). As a result, if the price of the asset rises dramatically in a short period of time, depositors may receive a “negative yield” on their ETH.
This will only happen if the ETH/USD exchange rate rises sufficiently, so depositors will still be in the black in USD terms. The vault also sells call options that are very far out of the money, implying that the options are unlikely to be exercised.
You have a lot of options when it comes to purchasing cryptocurrency. Ribbon Finance can be purchased using the Coinbase app anywhere Coinbase is available. It’s quick, simple, and safe. For residents of the United States, here’s how to purchase Ribbon Finance using the Coinbase app.
- Start by downloading the Coinbase app and filling out the registration form. To transact, you’ll need a valid ID and maybe proof of address, so make sure you have these on hand. Depending on where you reside, verifying your ID may take longer than a few minutes.
- Connect a payment method by tapping on the payment method box. You can pay with a bank account, a debit card, or a wire transfer.
- Type “Ribbon Finance” into the search bar to find Ribbon Finance. When Ribbon Finance appears in the search results, tap it to get to the buy screen.
- Input the amount you want to spend in your native currency using the number pad.
- This will be immediately converted into a Ribbon Finance amount by the app.
- When you’re ready, tap “Preview buy.” The specifics of your purchase will be displayed. Confirm your order. That’s all there is to it; you’ve purchased Ribbon Finance.
