SIREN, also known as Siren Markets, is a decentralized protocol for trading fully-collateralized options contracts around Ethereum ERC-20 tokens. SIREN facilitates this trading by tokenizing both the long and short sides of options contracts via semi-fungible ERC-1555 tokens.
This system allows advanced traders to easily speculate on or hedge against the price movements of popular DeFi cryptocurrencies. SIREN options are settled entirely on-chain, so traders bypass the centralization hassles inherent to third-party settling mechanisms.
Best of all, the project’s just leveled up. This week the SIREN V2 “Lyonesse” release deployed on Polygon, one of the Ethereum ecosystem’s leading scaling solutions. The V2 optimizations combined with the rapid, near-free UX afforded by Polygon makes SIREN easier to use and more powerful than ever, so let’s explore the top ways you can take the updated protocol for a spin!
Getting started with SIREN v2
Currently, SIREN v2 can be used in three fundamental ways: trading crypto options, underwriting crypto options, and staking liquidity provider (LP) tokens in order to earn the project’s SI governance token. Let’s break down the basics of joining each of these opportunities.
- Navigate to sirenmarkets.com and enter the “Trade” app.
- Connect a MetaMask or WalletConnect wallet via the “Connect Wallet” button.
- Switch from the Ethereum mainnet to the Polygon sidechain (Matic Network) in your wallet and accept the ensuing disclaimer and conditions prompt.
- You’ll arrive at SIREN’s trading dashboard for calls and puts, i.e. tokenized longs and shorts. Select which option style you prefer here and then browse the available contracts for your desired asset, e.g. MATIC. Remember: each contract has a unique strike price and specified expiry.
- Next, you’ll use the sidebar interface to input the number of options contracts you want to purchase + the amount of collateral you want to supply for doing so (e.g. MATIC Calls are collateralized with MATIC, SUSHI Calls with SUSHI, etc.).
- Your wallet will prompt you to approve SIREN to spend your tokens. Confirm that transaction and follow up with the final deposit transaction.
Once that completes, you’ll receive your options in the form of “bTokens,” which will grant you the right to buy/sell the underlying crypto at the specified strike price. You can also sell your bTokens back to SIREN’s liquidity pools as you please.
- The SIREN team has created a bespoke automated market maker (AMM) to facilitate the trading of its options contracts. Liquidity providers (LPs) to these AMM pools serve as “covered option writers … automatically underwriting contracts for which there is demand.”
- To serve as a SIREN LP, then, you take your collateral token (e.g. MATIC, SUSHI) of choice and navigate to the appropriate interface in the Pool dashboard of the SIREN “Trade” app.
- Input the amount of collateral tokens you want to supply, and SIREN will estimate how many LP tokens you’ll receive in kind. Carry through with the supply transaction, at which point the protocol will split your deposit into bTokens and underwriters’ wTokens.
- For LPs, the primary upsides of providing this service to the SIREN ecosystem is earning premiums from purchased options, i.e. bToken sales, and earning yield via trade slippage.
Staking LP tokens
- With the SIREN protocol being young, the project needs to bootstrap liquidity around its SI governance token in its earliest days.
- To achieve this goal the SIREN team is running an LP program (LPP) to incentivize depositors to Sushiswap’s SI-ETH liquidity pool (on Ethereum mainnet).
- The Sushiswap community has approved “double rewards” for this pool, meaning its LPs earn both SI and SUSHI token rewards for providing deposits and helping to bootstrap the pool.
- If you’re interested in this staking opportunity, first you’d take some SI and wrapped ETH (WETH) tokens and deposit them into the incentivized liquidity pool.
- Next you’d take your new Sushi LP (SLP) tokens over to Sushiswap’s “2x Reward Farms” interface and find the SI-WETH staking pool. In the provided drop-down menu input how many LP tokens you want to stake, confirm the deposit transaction, and then start earning both SI and SUSHI rewards!
With SIREN v2 live on Polygon, the name of the game is adding support for more cryptocurrencies, so users can trade options around and passively earn rewards through a wider array of assets.
In the meantime, keep in mind that SIREN remains young and a DeFi experiment, thus use it at your own risk. Also note that the project’s front-end website blocks residents of some countries from accessing the app, so check out the SIREN FAQ to learn more regarding where. Lastly, follow SIREN on Twitter and Discord to best keep track of the upstart protocol’s growth going forward!
Disclosure: This post is part of our paid promotional DeFi Pulse Drop series; We’ve partnered with SIREN to help educate and inform the community about Siren Markets. As always, we’re committed to providing the entire community with quality, objective information, and any opinions we express are our own.