The Dopex V2 Litepaper

I’ve read the Dopex V2 Litepaper so you don’t have to. Let’s cover the changes that will be coming with this new protocol wide update that unifies liquidity and enhances the UX.

The primary goal of Dopex V2 is turning all of Dopex’s current tools into a single product that is secure, user friendly, and reduces friction across the board. Dopex products include option vaults, straddles, scalps and 0DTE options which all fulfill a certain need in the degen’s toolbox but fragment liquidity in their current structure.

Enter Dopex V2 and The CLAMM

In the upgrade, users will be able to deposit their concentrated liquidity AMM (CLAMM) positions or unused tokens to provide liquidity. This will be the base liquidity of the entire protocol and will be held inside the CLAMM at certain ticks available for purchase.

The CLAMM is what will give users the ability to exercise at any time, a departure from European options that Dopex has used in the past.

When users deposit liquidity into the protocol, it will go into the CLAMM. In this, LPs aren’t subject to writing risk typically seen within options but rather IL like an LP position.

The beauty of this upgrade is that the procotol can take in different CLAMM LP positions and together they form a single consolidated liquidity base for all Dopex products.

While any token can be used for collateral for different products, the tokens that the protocol uses will be confined to an allowlist.

Buying Options with CLAMM

- User pays premium for option.

- Liquidity at tick (certain price) is removed and held within V2 contract.

- Position held in contact until settled or expiry reached.

- If OTM, tokens returned to LP.

- If ITM, trader will exercise and realize profit with remainder going back to LP.

The implementation of margin accounts will allow users to lever up if they so choose. If a position is 100% collateralized, there is zero chance of liquidation. This is not true for margin accounts.

The health doesn’t have a defined value as of yet, but once the threshold is passed a margin account may be liquidated. In this case, a user may liquidate the position, take the position at a discount with provided collateral, and must increase the health factor.

Naturally, there will be plenty of benefits for $veDPX holders. This includes:

✅ Boost on Liquidation Discounts

✅ Boost on Premium Share From LPs

✅ Governance Power

This Litepaper mainly revolves around the CLAMM, so we’ll speak about the other parts of Dopex V2 as they are made public.

This revamping of the protocol paves the way for Dopex to be a one stop shop for option endeavors on-chain without fragmented liquidity. If successful, both$veDPX holders and $PLS lockers alike will benefit from the thought the team put into optimizing the protocol.

Want to read the paper yourself? Find it here: https://discord.com/channels/83368