Introducing Buffer Finance
Decentralized short-term exotic options platform
Buffer Finance is a non-custodial exotic options trading platform offering defined-outcome and fast-paced trading over crypto and non-crypto markets (like forex, commodities, and indices).
Buffer abstracts complexity from options trading and lets DeFi-native traders trade multiple assets completely on-chain without the added complexity of liquidation, funding rates, or scam-wicks.
All trades are placed against a liquidity pool, liquidity providers can provide liquidity and take the counterparty risk to earn a part of the platform fee and esBFR token incentives
BLP is a USDC-based single asset pool that acts as the clearing house for options traders. Since LPs act as the counterparty to options traders, they earn both trading fees and mark-to-market PnL as position takers. If options traders' net positions lose money, LPs benefit from the distribution of wealth effects.
More BLP liquidity, in turn, allows the Buffer platform to support larger trade sizes, which generates higher protocol volume. This results in more fees for BLP and BFR stakers and more incentives to mint BLP and stake BFR.
Additionally, because of the short-term nature of trading instruments offered by Buffer liquidity can be churned multiple times generating much higher fees with significantly lesser capital.
BFR is the platform's native token that has both utility and governance functions. Staked BFR earns 40% of fees generated from the platform's trading fees in contrast to BLP, which accrues 55% of the fees (the remaining 5% is reserved for traders who participate in the Buffer Weekly trading contests).
Staked BFR and staked BLP earn esBFR rewards that can be vested over a year to be converted into liquid BFR tokens. This design allows the protocol to grow sustainably without the constant selling pressure.
- For liquidity providers: Buffer for LPs; How to Provide Liquidity; Protocol mechanism (Liquidity Pool)