Zeta Workshop at the Ignition Hackathon Workshop

Great to see a fellow Aussie team presenting in the Solana Ignition Hackathon workshop. Tristan from the Zeta team, presents a whole heap of awesome tips on how to get involved in the Hackathon and be a successful project. He shares tips on launching, community building, development, deployment and presentation. We also spent some time with him to ask about the Zeta Project.

Solana Ignition Hackathon Workshop – Tristan from Zeta

Check out the YouTube video below, which is part of the Solana Ignition Hackathon YouTube Playlist here!

Hi Tristan! Who are you and what is your background? What about the team?

I’m one of the core contributors to Zeta, leading a lot of work on the project as well as developing the back-end and smart contract infrastructure. My background is in data science and software engineering, having worked in multiple early stage startups and more recently in larger tech companies between Australia and the Bay Area.

But I’m only a small part of the puzzle, Zeta has an incredibly talented team of dedicated people which is growing rapidly (now into the double digits!). We all come from backgrounds in technology, trading and finance. Many of my colleagues have worked at top prop trading shops, banks, cloud software companies and the like, and bring their expert knowledge to the current DeFi domain. 

Most of us have also been crypto-obsessed for a number of years, with a lot of us getting into the space circa 2017. Since then we’ve been keeping an eye on the markets and algo-trading them when opportunities arise. With DeFi now at a pivotal stage, we figured it was the perfect time to dive more into the engineering aspect of building a core technology at the heart of a growing DeFi ecosystem.

Why is Options Trading important and how does it fill the gap in the Solana Defi Ecosystem now?

Options trading is hugely important in traditional financial markets. As financial instruments they afford a trader two useful opportunities:

  1. To structure bets on prices with leverage
  2. To hedge and manage risk on their portfolio

The former is well aligned with current crypto trading trends as we’ve seen a lot of demand for DeFi and CeFi users speculating on token prices with leverage. This is especially prevalent with the rise of perpetual swaps on platforms like Binance and FTX. The volume on these derivatives generally eclipse spot trading volume by roughly a factor of 10 because they are so much more capital efficient, allowing people to trade with very high leverage. 

The latter is also super interesting in regards to crypto markets due to the inherent volatility in prices and frequent market swings. By purchasing say a put option, you are in essence purchasing fixed-price insurance on your portfolio in case the market crashes. We see this as being a very useful tool in the trading toolkit, allowing traders to tailor this risk exposure to price movement and price volatility. Long-term we want to offer structured derivatives products like straddles for example, that combine various combinations of options to create unique risk and payoff structures not currently available in DeFi.

In terms of the DeFi ecosystem, we really haven’t seen options take off yet because of the sheer difficulty of the problem at hand (rather than a lack of demand, just look at the surge in volume on Deribit if you need convincing). A large constraint we’ve seen for current DeFi options platforms is the performance of the underlying chain. Many platforms built on Ethereum are crippled by slow transaction speeds and exorbitant gas fees that price out retail users (nobody wants to pay $200 in fees to trade a call spread). We believe Solana solves this. Due to its high transaction throughput (50k tx/s) and short block times (400ms) we are able to build a properly functional DeFi options platform with components like liquidation systems that would not otherwise be feasible on other chains.

What can Zeta users expect by trading options?

Currently our early alpha product offering allows for the trading of binary options, these are a watered down version of the full european options that we intend to build. When trading on our platform, users can trade against our best-in-class Black-Scholes options market maker (BS-AMM) to both buy and sell calls (selling a binary call is equivalent to buying a put). Our BS-AMM provides the fairest options pricing possible by using the canonical Black-Scholes-Merton formula for options pricing that is the gold-standard in TradFi. We also allow margin trading up to 10x leverage so users can take on larger positions without needing a significant amount of upfront capital (though beware of liquidations if the price turns against you!). Once the expiry time on your options is up, all your positions will be automatically settled by our system and the profit and loss (PnL) reflected in your margin balance.

In the next iteration of the product we will be integrating with the Serum orderbook to enable full orderbook trading of options. Furthermore, we will be opening up our BS-AMM strategy for liquidity to be contributed by any user into its liquidity pool (right now all liquidity is provided by the platform). As an LP into this pool you would earn trading fees as well as share a slice of the profits made by the central market making strategy.

Will Zeta deliver Everlasting Options? Why is that good?

We can’t commit to any firm promises right now, however it is definitely something we are very eager to tackle and we’ve had some back-and-forth conversations with the authors of the paper. We think given the success of perps that this could be a big winner if we manage to crack the implementation. It’s definitely a non-trivial problem to solve, but if solved it offers a lot of key benefits in terms of not needing to roll-over options positions when they are close to expiry to maintain your same exposure. Furthermore, this in turn solves a key issue in options markets whereby liquidity is fragmented across all strikes and expiries. By taking the expiry dimension out of the picture, we can condense the liquidity on our platform into a smaller selection of markets.

What do you like best about developing on Solana over Ethereum?

We like developing on Solana because it affords us a lot more flexibility in terms of the features we are able to build. It feels closer to CeFi development when your back-end speed isn’t the main blocker. Solana is also written in Rust, which is a very modern programming language built for speed and safety. A lot of bugs one might encounter in Ethereum when accessing global EVM state are not really an issue in Solana, which is stateless and forces a lot of explicit checks when calling functions.

The downside to developing on Solana is that there’s a much steeper learning curve and some of the development tooling is a lot more nascent. However frameworks such as Anchor are rapidly evolving and making our lives a lot easier to develop dApps.

Where do you see Zeta in 3 years?

In 3 years we see Zeta as being the market leader for options on DeFi. We have a smart, humble and passionate team that we know have the requisite knowledge and problem solving skills to bring the CeFi options trading experience to DeFi. As DeFi becomes more viable as a trading platform I think we will only see more and more volume cascade into the ecosystem like it has for killer projects such as Uniswap. We see Solana growing rapidly (as it already has been to date) and more liquidity flowing into the ecosystem natively, as well as via cross-chain liquidity bridging solutions such as Wormhole.

Do you think Australia is at the forefront of blockchain? If not, why not and what can we do about it?

Surprisingly we’ve actually bumped into quite a few fellow Aussies in the space, so I’d say we certainly punch above our weight in the blockchain space. In the grand scheme of things, it’s still a very small pool of awesome individuals and we’d all love to see it grow more. We think there’s enough talent and a good foundation for Fintech in Australia, so I think once blockchain becomes more accepted and mainstream then we will probably see more folks making the jump from traditional finance and tech. 

Some factors that would definitely accelerate growth in this space would be clearer regulatory frameworks for blockchain and digital assets, and more support via grants and incubation programs. We see this done really well in forward-thinking places like Singapore, so hopefully we see some good ideas make their way across.

Any cool Zeta things coming up that everyone should know about?

Our binary options platform is up on the Solana devnet! Feel free to jump on it and learn to trade options on our fully on-chain DEX. Don’t worry about losses for now, since it’s on devnet the only thing you’ll be making or losing is paper money. It’s a good opportunity to see how the platform works and work towards becoming a pro options trader.

Check it out at https://trade.zeta.markets/

What should Zeta followers do right now? 

We’re growing a really strong community at Zeta. To follow our progress and updates, as well as engage with our team and vibrant community, feel free to join us on:

Check out the rest of the Solana Ignition Hackathon workshops here!

Solana Ignition Hackathon YouTube Playlist

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