This guide provides a technical overview of the Polynomial Protocol Official infrastructure, focusing on the Polynomial Earn Vaults and how they leverage the Synthetix backend to execute automated options strategies on the Polynomial on Optimism network.
Step 1: The Synthetix Foundation
First, understand that Polynomial powered by Synthetix. It does not have its own separate liquidity for derivatives. It acts as a sophisticated strategy layer on top of the Synthetix protocol. This means all options traded are Synthetix Options, and all settlements use Synthetix's deep liquidity.
Step 2: How the Earn Vaults Work
The core of Polynomial's product suite is its automated vaults. When a user deposits assets into a vault, they are subscribing to a specific, on-chain options strategy.
Example Strategy: A common vault might run an automated covered call strategy. It uses the deposited ETH as collateral and systematically sells out-of-the-money ETH call options on a weekly basis to generate yield.
Gamma Scalping: More advanced vaults employ Polynomial Gamma Scalping techniques, actively managing their options portfolio's gamma exposure to profit from market volatility. This is one of the key Polynomial Automated Strategies.
Step 3: The Developer Angle
As a developer, you don't trade on Polynomial in real-time. Instead, you can build on top of its primitives:
Integrate Vaults: Build a DeFi dashboard that allows users to deposit into different Polynomial Earn Vaults.
Analyze Performance: Use on-chain data to track the historical performance and risk metrics of each vault.
Structured Products: Combine vault positions with other DeFi primitives to create novel structured products.
Step 4: Security Model
The question "Is Polynomial Protocol Safe?" is answered by its reliance on the highly audited and battle-tested Synthetix protocol. The Polynomial strategy contracts themselves are also audited, providing a robust, multi-layered security model.
For all vault contract addresses and strategy details, refer to the Full Official Documentation.
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