Options have been one of the biggest question marks in DeFi. The crypto retail crowd seems to be on board the perpetuals train with no real desire to leave. And this has left many an options DEX befuddled as to what they can do to appeal to on-chain degens. After all, between the stock market’s 0DTE options and traders swinging hard on OTM calls/puts, the options market has become a bastion of retail market participation over the last four years.

There a couple of things in play here. The most obvious of which is that crypto is an extremely high-volatility asset class without even touching leverage. BTC is volatile, all other coins are volatile even in comparison to BTC. Realistically, as a trader that has a good pulse on the “altcoin” market, why would you even need to touch leverage? An asset with a 1.5 beta to BTC has the *potential* to deliver immense returns by simply sticking to spot. When you do feel the desire to lever up, why would you need to go beyond delta-one products like perpetuals and futures? The added complexity of options makes it a lot less appealing.

One possible resolution I’ve been thinking through recently is how options may just need a rebrand. Perhaps something closer to binary options over the Greek-derivative-math-nerd shtick. The idea is simple: if you think on-chain prediction markets and binary options on events have a bright future, why wouldn’t the same apply to crypto markets? Instead of American/European options, you could just have fixed strike binaries. BTC will trade above $50K by June 1, 2024; yes or no.

We know retail and degens, at large, love simple instruments. But perhaps the reason stock market degens gravitate towards options is just the lack of spot volatility, thus amplifying the need/desire for instruments with higher implied leverage. Which would imply that we’re actually years — maybe a decade — away from on-chain users caring about options.