Overview

What Is Stryke? 

Stryke is a decentralized options exchange that offers a variety of crypto options and yield-bearing products. 

Users can buy and sell monthly or weekly calls and puts for a variety of assets, including BTC, ETH, ARB and others. The protocol also recently introduced the “Concentrated Liquidity Automated Market Maker” (CLAMM) product, which combines the enhanced yields of Uniswap v3-style concentrated liquidity pools with crypto options.

Stryke Key Features

• Concentrated Liquidity Automated Market Maker (CLAMM): The CLAMM is an innovative options instrument that combines concentrated liquidity (popularized by Uniswap v3) and options trading to provide enhanced yields. In essence, user positions double as yield-bearing liquidity and also options available for purchase, maximizing yield over traditional options or liquidity-providing positions. 
  
• SYK – a cross-chain governance token that can be escrowed into xSYK for voting rights and passive income from trading fees.

• Option Liquidity Pool: Due to the nature of options, buyers and sellers commit to the options contract for a fixed amount of time — in the case of Stryke, this is either a week or a month. The Option Liquidity Pool allows users to sell their options early to buyers who are willing to buy their obligations. The OLP is also another way that option sellers can provide liquidity and earn yield from writing options.   

A Primer On Options Trading

We’ve covered options trading in the past here on Milk Road, but let’s do a quick recap, as Stryke requires a good grasp of options theory. 

What are Options?

Options are a type of derivative contract. This means that options derive their value from some underlying asset. In traditional finance, this underlying asset is usually a stock, while in crypto, it’s usually a cryptocurrency such as BTC or ETH.  

Options give buyers the right, but not the obligation, to buy or sell an underlying asset at a predetermined price (strike price) before or at a certain date (expiration date). There are two types of options: “calls” grant the right to buy the asset at a particular price in the future, while “puts” grant the right to sell the asset at a particular price in the future.

For example, let’s say I buy a call option for ETH. This allows me to buy ETH at a certain locked-in price in the future, regardless of what the actual price of ETH is at that time. 

In this example, let’s say I buy a call option to purchase ETH for $2,000 two months from now. The $2,000 is known as the “strike price,” while the exact date two months from now is known as the “expiration date” of the option. I also pay a fee, known as the “option premium,” to buy the right (but not the obligation!) to purchase ETH for $2,000 on a specific date two months from now. Puts work in reverse, allowing me to sell an asset like ETH for a fixed price at some future time, regardless of the market rate.

Buyers & Sellers

The option buyer pays a premium for reserving the right to purchase or sell the asset for a fixed price at some future time. This option premium, in turn, gets paid to the option seller for the service of selling or writing the option. 

In essence, options are a two-sided bet, with buyers betting that the future price of the asset will compensate for the option premium they paid and sellers collecting the option premium upfront and betting that the option won’t need to be exercised. 

Making Money From Options

Options expire either “in the money” or “out of the money,” determining whether the option is profitable to exercise for the buyer. 

In short, buyers hope that, at expiration, options are “in the money,” and they can exercise them and either buy or sell an asset for a better price than the market rate, while sellers hope that options are “out of the money” and they get to collect the option premium from the buyer without having to lose out on the opportunity cost of the asset.

Our Expert Review Of Stryke

Stryke is a decentralized exchange for trading cryptocurrency options. 

Decentralized crypto options work a bit differently from traditional options and even crypto options on centralized exchanges (like Binance). Traditional options use an “orderbook” trading model, where individual traders take both sides of the options bet — meaning someone buys an option with a defined party on the other side selling that option to them. 

In decentralized options, on the other hand, users who want to sell options deposit assets into a pool, earning an aggregated yield from the premiums this pool collects. Option buyers, in turn, purchase options that are underwritten by the assets in this pool and pay their option premiums into the pool as a whole. 

This is the model that Stryke uses. Below, we take a look at some of the flagship products and features the exchange supports. It’s also worth noting that Stryke is currently undergoing a major overhaul. After initially launching as the first decentralized options exchange on Arbitrum a few years ago, Stryke is progressively rolling out a v2 that includes features like the CLAMM and major improvements across other products. 

Let’s dig in. 

Concentrated Liquidity Automated Market Maker (CLAMM)

One of Stryke’s most unique products is the “Concentrated Liquidity Automated Market Maker” (CLAMM.) This one takes a bit of explaining, so hold on tight to your milk and cookies.

Beginning with Uniswap v3, the world of DeFi was introduced to concentrated liquidity. On decentralized exchanges like Uniswap, users can provide liquidity by depositing various crypto tokens. This allows others to trade assets using the deposited liquidity while the depositors (known as liquidity providers) earn yield on their deposited tokens. 

Concentrated liquidity is an innovation that allows users to provide liquidity within a certain price range. This “concentrates” their liquidity and allows for higher yields as long as the price of the asset stays within this predefined range. 

The CLAMM brings concentrated liquidity to options trading. Here’s how it works.

Buyers deposit liquidity for an asset, such as ETH, buying up “ticks” that represent slices of concentrated liquidity. In the image above, you can see that the red tick represents prices between about $1,775 and $1,780. If you deposit liquidity into this tick, you will earn yield whenever the price of ETH is within this narrow range. 

Each tick has a different yield rate depending on market conditions, and you can purchase multiple ticks (adjacent or nonadjacent) to ensure that you are continuously earning yield as the market price moves up and down. 

So, you’re able to deposit concentrated liquidity within a narrow price range and earn enhanced yields as long as the price of the underlying asset is within this range. Where do options come in?

It turns out that you can buy and sell these ticks, and their payoffs act just like options. As the price of an asset fluctuates, you earn more or less depending on how you set up your liquidity-providing strategy, just like how your option payout varies depending on market prices.

Stryke has recently expanded by partnering with Pancake Swap and SushiSwap to have their CLAMM options available on those platforms.

That’s as much as we’ll be able to get through here without filling up 10 whole pages with explanations, but you can learn more about how the CLAMM works through Stryke’s official CLAMM guides. 

As far as supported assets go, all CLAMM markets are denominated in the stablecoin USDC and one of three crypto assets: WBTC, ETH, and ARB. 

SYK

SYK is Stryke’s token. It has a max supply of 100 million, with about half of that currently circulating. Though the token contract is based on the Arbitrum One chain, SYK is planned as a cross-chain token, facilitating migrations and liquidity across various chains.

Holders can lock their SYK tokens into vested escrow contracts and receive xSYK on a 1:1 basis. To incentivize long-term investors, users will need to vest their xSYK tokens for at least seven days. But, even at that point, you will only receive 50% of your SYK tokens back if you try to convert your xSYK. To receive your full investment back, you will need to hold those xSYK tokens for at least six months.

But there are reasons to hold onto those tokens. Holding xSYK tokens allows for participation in the governance and voting of the Stryke platform. Additionally, locking up SYK generates rewards in the form of SYK and xSYK tokens. Yields come from trading fees.

Customer Service

As a decentralized protocol, Stryke relies on community channels like Discord, Telegram, and WhatsApp to provide assistance and answer questions. 

I contacted the team by opening a ticket through Discord, and it took a while for me to receive an answer, so your best bet may be to message them across multiple channels to make sure you receive assistance. 

Who’s Stryke For?

• People who have extensive trading experience: Options trading is one of the most advanced types of market participation, both in traditional markets and in crypto. The instruments are complex, and it takes an expert grasp of crypto mechanisms to really understand where the yield is coming from. Getting involved in these markets without a sufficient understanding of what you’re doing is a recipe for disappointment (and insolvency.) 

• People who are comfortable with high-risk markets: Even in traditional markets, options trading is canonically one of the most volatile and risky arenas traders can step into. In the even more volatile and risky world of crypto, this is also the case. On the other side of great risk, there may be a great reward, but it’s important to do a candid assessment of your risk tolerance and only enter options markets if you’re comfortable with the dangers involved. 

• People who are looking for asymmetric yield: If Spiderman were an options trader, his motto might be something like “With great risk comes great yield-ability.” If you’re well-read and risk-tolerant enough to wade into the waters of crypto options trading, you can enjoy high APYs and quick bag pumps. Just remember to get out at the right time before you become someone else’s exit liquidity. 

Who’s it Not For?

• People who are new to crypto: If you’re new to crypto, jumping into the deep end of options trading may not be the best start to your journey. Blockchains and cryptocurrencies are hard enough to understand as is, and investing in something you don’t understand is the fastest way to lose your money. If you don’t understand where the yield is coming from, don’t invest!

• People who are new to options: Options are complex types of financial instruments, and understanding how well your options positions are doing based on various market prices can quickly become overwhelming. There are plenty of crypto investment opportunities that are much simpler, and traders who don’t already have experience with options trading may find themselves lost on Stryke. 

• People who want sustainable yield: With most financial markets, the higher the yield, the more sporadic and risky rewards are. For traders who would like constant, predictable yield, options may not be the best choice. Options offer high yields during times of market uncertainty, but there are other instruments that provide much more predictable and sustainable rewards over time.  

Stryke Alternatives

Decentralized derivatives exchanges have gained significant traction during the bull market. Below, we take a look at several of the popular alternatives to Stryke and compare how they stack up. 

Stryke Vs. dYdX

dYdX is the most popular decentralized derivatives platform by trading volume. While Stryke focuses on options, dYdX’s main offering is perpetual futures — a type of derivative that does not have an expiration date and is commonly used for leveraged price speculation.

On the other hand, dYdX does not offer advanced derivatives features like concentrated liquidity options and advanced synthetic assets that can be chained together for enhanced yield the way Stryke does. 

Stryke vs. GMX

GMX is another popular decentralized derivatives platform. Though it mainly focuses on perpetual futures, GMX also provides a number of yield-bearing tokens, similar to Stryke , that users can leverage to earn yield. 

Like Stryke , GMX is available on L2 chains like Arbitrum. Where Stryke has markets for Polygon, however, GMX has Avalanche markets. 

Is Stryke Safe to Use?

Due to the ever-changing nature of crypto, we cannot accurately say how safe and secure a product is now or will be in the future. We have examined a variety of factors to determine how safe we believe Stryke is, but please always use caution and thoroughly investigate the platform for yourself before using it.

One of the most important factors when it comes to assessing the security of a decentralized protocol is whether they have completed audits of their codebase. Stryke has received several audits that find no major issues with the protocol, so this is a good sign for the overall safety of the protocol. 

The anonymity of the team behind the exchange may raise some questions, however Stryke has been live since 2017, and the team has since proven that they are invested in the long-term success of the protocol. 

Stryke Founders

Stryke is built by an anonymous team that mostly communicates through their crypto-Twitter handles. 

The most prominent figurehead of Stryke is known as “TzTok-Chad” on Twitter, where they tweet about all things Stryke, like the protocol developments and the product roadmap. 

Has Stryke Been Audited?

Yes, Stryke has undergone several audits by notable companies including Solidified and Sourcehat. Recent audits include one by yAudit for their CLAMM offering.

Final Thoughts On Stryke

Stryke is an innovative options exchange that supports several flagship products and provides yield in inventive ways. For traders with a risk appetite, Stryke allows speculation across various options, products and synthetic tokens. 

The anon status of founders, while common in crypto, may give some potential investors pause, and the protocol keeps a pretty tight grip on new features, with no avenue for the community to get involved in governance currently. 

Still, Stryke promises enough yield-bearing debauchery for even the most seasoned degen. 

Frequently Asked Questions

George Hristov

Contributor

George is a tech writer interested in web3 startups and communities. In the dynamic world of crypto, he stays plugged into the day-to-day headlines, deep dives, and industry commentary.

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Shannon Ullman

Managing Editor

Managing editor working to make crypto easier to understand. Pairing editorial integrity with crypto curiosity for content that makes readers feel like they finally “get it.”

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