Oddz To Integrate Chainlink Implied Volatility Data Feeds
Empowering options premium calculation using Chainlink’s dynamic implied volatility (IV) oracle networks
We are pleased to announce our upcoming integration of Chainlink Implied Volatility (IV) Data Feeds to support our multi-chain options trading platform. By integrating Chainlink’s market-leading oracle network, Oddz Finance will have access to tamper-proof, dynamic IV data to accurately calculate options premium based on the expiration dates.
Initially, Oddz Finance will refer to Chainlink’s IV Data Feed for BTC/USD and ETH/USD across the Ethereum, Binance Smart Chain (BSC), Polygon, and Huobi ECO Chain (Heco) blockchains. We selected Chainlink as our go-to oracle solution because it sources high-quality data using decentralized, time-tested, and hyper-reliable infrastructure that have strong built-in resistances to potential exchange inaccuracies or data manipulation attacks.
Enabling Secure Options With Chainlink’s IV Data Feeds
An option is a contract giving the buyer the right, but not the obligation, to buy (in the case of a call option contract) or sell (in the case of a put option contract) the underlying asset at a specific price on or before a certain date. Traders can use on-chain options for speculation or to hedge their positions. Options are known as derivatives because they derive their value from an underlying asset.
Oddz Finance has developed a decentralized multi-chain options trading platform with core features that support put and call options, conditional tokens, and perpetual trading. Our platform offers the following benefits to users:
- Zero gas fees
- Easy-to-use interface
- Support for multiple assets
- Transparent premium calculations
- Customizable options contract parameters
- Liquidity Provider (LP) incentives and staking rewards
- Governance framework for new protocol additions
One of the key aspects of options markets is pricing. Implied Volatility (IV) is a data point that describes the likelihood of an asset’s price changing from its current price before its eventual expiration date. It is commonly used to calculate options contract premiums, which are based on an asset’s estimated price at expiry.
Chainlink nodes source IV data from off-chain data providers who use the Black-Scholes formula. The oracle network then aggregates the responses of nodes to arrive at a single IV data point that is broadcast on-chain and stored within a reference contract for the particular price pair. Chainlink IV Data Feeds offer real-time IV quotes that are dynamic, which means the IV data point stored in the reference contract is frequently updated to reflect changes in current prices and market conditions. To access the IV data points, developers need to make a single function call to the reference contract to get the most up-to-date IV value.
Having Chainlink IV Data Feed for our platform’s underlying assets will enable users to create options contracts backed by transparent, robust, and up-to-date IV calculations. We selected Chainlink because of its unique features like:
- High-Quality Data — Chainlink sources IV data from numerous premium data providers, who maintain robust market coverage, weight data by volume/liquidity, and remove outliers/fake volume. This mitigates vulnerabilities around API downtime, exchange inaccuracies, and data manipulation.
- Reliable Nodes — Chainlink IV Data Feeds are secured by a large collection of independent, security-reviewed, and Sybil-resistant oracle nodes run by leading blockchain DevOps teams. Chainlink nodes have a strong history of performance even during extreme market volatility and periods of high network congestion.
- Decentralized Infrastructure — Chainlink IV Data Feeds are decentralized at the data source and oracle node level, eliminating central points of failure in the sourcing and delivery of external data to the Oddz platform.
- Transparent Performance — Chainlink IV Data Feeds can be monitored by anyone in real-time, allowing users to verify the accuracy of the IV calculation that they received.
“ By integrating Chainlink’s IV Data Feeds, Oddz can facilitate options trading solutions for dApps across multiple leading blockchains. As a result, traders can hedge their underlying asset with Chainlink’s dynamically calculated IV, which is superior when compared to other protocols that use static IV across various underlying assets and expiration dates.”
Aishwarya Shivakumar Haroshivanahalli, Co-Founder and CEO
Chainlink is the most widely used and secure way to power universally connected smart contracts. With Chainlink, developers can connect any blockchain with high-quality data sources from other blockchains as well as real-world data. Managed by a global, decentralized community of hundreds of thousands of people, Chainlink is introducing a better model for contracts. Its network currently secures billions of dollars in value for smart contracts across the decentralized finance (DeFi), insurance and gaming ecosystems, among others.
Chainlink is trusted by hundreds of organizations to deliver definitive truth via secure, reliable data feeds. To learn more, visit chain.link, subscribe to the Chainlink newsletter and follow @chainlink on Twitter.
Oddz is a Multi-chain options trading platform enabling users to trade customized options. It is a simple, secure, and decentralized platform offering a seamless on-chain option trading solution with an in-built Oracle solution.