Jasper Vault is a DeFi platform focused on options trading. It utilizes advanced technologies like Account Abstraction and Program-Derived Addresses to facilitate secure, peer-to-peer trading across multiple blockchain networks. ^[1]

Overview

Jasper Vault is a peer-to-peer interoperable options protocol designed to simplify and secure DeFi options trading for a broader audience. The protocol utilizes Account Abstraction (AA) technology, Program Derived Addresses (PDAs), and Atomic Swaps through Hash Time-Lock Contracts (HTLC) to facilitate peer-to-peer trading and cross-chain interoperability across different wallets. ^[1]

For Option Buyers, Jasper Vault offers a user-friendly and intuitive trading interface that ensures transparency and security. The protocol supports trading without scam wicks, physical delivery of options swaps, and a beginner-friendly trading interface. For Option Sellers, Jasper Vault introduces a peer-to-pool-to-peer model that eliminates counterparty risks through its Defi Options Vault (DOV). Sellers can earn additional protocol fees from trading activities conducted on Jasper Pro, enhancing their participation in the options market. ^[1]

Architecture

Option Orders Issuance

Jasper Vault utilizes ERC-4337 to establish its complete peer-to-peer (C2C) option trading system. Similar to how it operates on the EVM network, Jasper Vault employs Hash Time-Lock Contracts (HTLC) to construct its C2C option trading system on the Bitcoin network. ^[2][3]

On the Seller Side, sellers lock BTC on the Bitcoin blockchain. A relayer monitors Bitcoin transaction logs continuously. Upon detecting a transaction, Jasper nodes use EIP-712 to sign the locked BTC. The relayer then submits these BTC transaction logs and Jasper signatures. These EIP-712 signatures are subsequently submitted to the EVM chain for verification. Finally, the EVM chain records the order information in a smart contract. ^[2][3]

On the Buyer Side, Jasper Vault buyers purchase orders from sellers and pay the premium on the EVM chain. The EVM chain records the order details, and the relayer monitors EVM transaction logs. The premium payment is sent to the sellers based on the recorded transaction details. ^[2][3]

Trade Settlement

In Jasper Vault, options trading settlement involves three main scenarios: Cash Exercise, Asset Exercise, and Not Exercising. ^[4]

• Cash Exercise: When the current price exceeds the strike price, buyers opt for cash exercise settlement. A relayer monitors EVM transactions and submits logs to Jasper Nodes. These nodes verify and sign the BTC unlock transaction using PSBT. Subsequently, the relayer monitors Jasper's signatures and submits the unlocked BTC signature on the Bitcoin blockchain. Profits are then sent to buyers, and any remaining BTC is returned to sellers.
• Asset Exercise: When the current price exceeds the strike price, buyers can choose asset exercise settlement. Here, buyers pay USDT for BTC instead of cash. The process involves the relayer monitoring EVM transactions, submitting logs to Jasper Nodes, verifying and signing the BTC unlock transaction using PSBT, and then monitoring Jasper signatures. Finally, the relayer submits the unlock BTC signature on the Bitcoin blockchain, transferring BTC to the buyers.
• Not Exercising: If the current price is below the strike price and the BTC lock period expires, the sellers' BTC is unlocked. The relayer monitors Bitcoin transaction logs, and Jasper Nodes verifies these transactions. Using EIP-712, the nodes sign the non-exercising BTC. The relayer then submits the BTC transaction logs and monitors Jasper's signature transactions. Finally, the non-exercising signature is submitted to the EVM chain for verification to close the order.

Features

Degen Options

Degen Option is a new feature introduced by Jasper Vault, enabling users to open an 8-hour At-The-Money (ATM) call and put options for Ethereum (ETH) and Bitcoin (WBTC) with European-style settlement. Initially accessible on the Sei Network and Arbitrum, it plans for future integration across multiple chains. Key characteristics of Degen Options include: ^[5][6]

• Access to high leverage, up to approximately 150x, depending on market volatility.
• More affordable than longer-dated options (daily, weekly, monthly), catering particularly to smaller traders.
• Zero risk of liquidation due to market volatility within the 8-hour duration of the position.
• No restrictions based on time zones; the 8-hour expiry period begins when the position is opened.
• At-The-Money (ATM) strike prices ensure easy accessibility, allowing users to focus on market direction.

Swap Options

Swap Options is a novel product from Jasper Vault that lets users pay a small protocol fee upfront to lock the asset value for a specified period. This allows users to swap the asset value at their desired price within that period. Swap Options is exclusively available on the Sei Network. Key characteristics of Swap Options include: ^[7][8]

• No time zone restrictions.
• At-The-Money (ATM) strike prices for easy user accessibility and focus on market direction.
• Physical delivery of the underlying asset, similar to a swap.
• Zero liquidation risk due to market volatility before the expiration while the position is open.

Jasper Pro

Jasper employs a hybrid pricing approach, combining centralized and decentralized methods. Unlike traditional decentralized exchanges, Jasper uses a centralized pricing service that synthesizes data from reputable sources like Deribit and CoinMarketCap. Utilizing the Black-Scholes algorithm, Jasper provides reliable protocol fee quotes for various assets at different strike prices and time intervals. ^[9][10][11]

This approach ensures high pricing accuracy, enhancing user confidence. Jasper integrates centralized data processing for option protocol fees with blockchain technology for data integrity. Every quote is signed using EIP-712 standards, ensuring easy verification and authentication boosting security and user trust. ^[9][10][11]

Jasper offers a secure, transparent, and efficient trading platform tailored to sophisticated crypto options traders. By merging on-chain settlement with off-chain matching and data acquisition, Jasper continues to enhance its platform, pushing the boundaries of decentralized finance. ^[9][10][11]

Trading Process

Jasper employs a novel trading process for its hybrid decentralized model: ^[12]

1. Price Acquisition: Users begin their trading journey on Jasper’s platform by viewing the latest option protocol fees, fetched in real-time from the centralized pricing service. This ensures that all potential trades are based on the most current and accurate financial data.
2. Initiating a Trade: When users decide to buy an option, they interact with Jasper's dApp, which displays the necessary protocol fee information. If the buyer agrees to the price, they can initiate a trade directly through the dApp.
3. Order Processing: Once the order is submitted, it is picked up by a centralized listening service, which notifies the seller's representative. This centralized component swiftly validates the signed price data included in the order.
4. Trade Confirmation and Settlement: After validating the price signature, the seller agrees to the trade, and the transaction moves forward. The actual exchange of assets, facilitated by smart contracts, is conducted entirely on-chain, ensuring that the final settlement is secure and immutable.
5. Post-Trade: If the buyer chooses not to exercise their option by the expiration date, the assets locked in the smart contract are safely returned to the seller, concluding the transaction with no obligations unmet.

Partnerships

• Elliptic
• Fireblocks
• Knownsec
• Slowmist
• Pyth

Sei Network

On May 26th, 2024, Jasper Vault announced its integration with Sei Network, introducing an options platform to the decentralized finance (DeFi) space. The introduction of Swap Options and Degen Options on the Sei Network was set to enhance options trading, establishing new standards for security, accessibility, and interoperability. ^[13]