Dopex Review by Jesse


Welcome to this week’s coin review! With a new Bitcoin all-time high just minutes away at the time of writing, Moonvember looks to be kicking off without a hitch. Sidelined blockchain Kadena has been put into the spotlight this week with its 150% run. Trailing behind is Loopring with 100% gains and stepping to the top for the first time in almost a year with 80% gains. Being the least expected runner is kind of a homage to previous bull runs. With the biggest winners and top gainers almost never turning out to be who the market expected. Testifying how important diversifying your portfolio across different blockchain use cases can be when money is being thrown at everything. Today we’ll be looking at what’s still considered a newer use of DeFi with options trading on Dopex Protocol.



Dopex Protocol is a decentralized options exchange protocol that aims to maximize liquidity, cut losses for option writers and maximize gains for option buyers. Without requiring the user to learn any new technologies. Dopex operates in a passive manner for all liquidity contributing participants. Option pools available for all options on Dopex allow anyone to take part and deposit base/quote for their respective pools to gain passive income from option writing. Dopex also enables the purchasing of discounted options through liquidity pools which could then be arbitraged for an instant profit. A unique rebate mechanism allows for option writers to gain a superior return in comparison to writing naked options or hedged option writing strategies of any type. Dopex options are built to closely mimic Deribit options as much as possible considering its dominant market share in the space currently. The Dopex Protocol consists of many moving parts to provide a liquid, well-incentivized platform replicating successful option platforms by making use of Sushiswap, Chainlink, and UMA Protocol in its core architecture. Dopex uses assets from the asset pools along with Black-Scholes price accounting to allow anyone to buy options based on strikes of their choice for future expiries. Dopex enables anyone to become a liquidity provider by adding base or quote assets to Option and Liquidity pools.


Existing option providers need the user selling volatility to decide which strikes and expiries they’d like to provide liquidity for while constantly scanning order books for buy-side liquidity. Dopex makes use of option pools allowing anyone to earn a yield passively by selling options to purchasers with minimal interaction with the underlying protocol. Pool participants can simply deposit base or quote assets to a pool which would be utilized as liquidity to users looking to buy a call and put option. Like Single Staking Vaults, Single Staking Option Vaults allow users to lock up tokens for a specified period of time and earn a yield on their staked assets. Users will be able to deposit assets into a contract which then sells your deposits as call options to buyers at fixed strikes that are selected for end-of-month expiries. Dopex offers a feature that allows users to swap their options for a different expiry and/or strike price at any time. This allows users to swap their options without worrying about the current liquidity for their available options in the market. This is due to the swap being done by changing the collateral locked in the option pools. To audit the platform properly Dopex makes use of weekly “epochs” for accounting assets, option flows, and reward/rebate distribution of the DPX token as incentives for providing liquidity to the platform. Option pools within the protocol may also have their own weekly or monthly epochs. Funds locked in the volume pool before an epoch may be used to buy options from the option pool based on a 5% discount. Liquidity providers for both option and liquidity pools can always create withdrawal requests to withdraw their share of the pool after the current epoch. A standard factory contract is used to create and whitelist new option pools controlled by the Dopex team. This process will eventually be handed over to the governance contract at a future date. All options on Dopex expire at 8:00 AM UTC and can be exercised during a 1-hour window before the expiry time between 7:00 AM UTC to 8:00 AM UTC. Settlements on option exercises happen without requiring the underlying asset and are net settlements. The Profit & Loss of the option is calculated and then exercised to burn any option tokens and transferred to the PnL in the settlement to the user.


To incentivize option market professionals into utilizing the protocol and actually purchasing options, Dopex makes use of volume pools. Volume pools allow users to deposit funds before weekly global epochs and use funds from the pool to buy options from any option pool at a 5% discount. Volume pools create an arbitrage opportunity for sophisticated options traders to buy options at a discount and immediately arbitrage them against other exchanges to capture a profit. Volume pool depositors are also given DPX token rewards at the protocol’s initial phases to further incentivize pool usage. At the end of every epoch, users can withdraw any excess funds from the volume pool. But, they would have to pay a 1% penalty at the withdrawal for non-usage of funds. All penalties are withdrawable by DPX governance token holders in the form of protocol fees.


Dopex Protocol offers a rebate system for losses incurred for option writers based on exercised options for every epoch. These rebates are paid in the form of a theoretically infinite supply token, rDPX. Rebates are calculated based on percentage losses incurred by option writers for an epoch and a percentage of rDPX relative to the value of losses incurred to be minted and distributed to option pool participants. The percentage rebate is determined by a governance process based on votes by DPX holders within the protocol. Its possible rDPX in the future can also be used as collateral to borrow capital from the margin pool to leverage option positions or to mint synthetic derivatives of different assets supported within the protocol including cryptocurrencies, stocks, ETFs, commodities, and fiat currencies. This inherently gives the rDPX token real value and creates a positive feedback loop for liquidity to grow and option writers and traders to take part. Considering the liquidity, this allows for cheaper options to buy and higher ROI from option writing. Native DPX governance token rewards and rebates are distributed relative to assets locked within all whitelisted option pools. Rebates are calculated based on the total value of assets in USD along with premiums collected after an epoch, versus the total value of assets in USD before the epoch. Rebate tokens are minted based on the current TWAP of rDPX on Uniswap with the percentage of rebate having the option to be changed by future governance proposals. to create these synthetic derivative tokens while using rDPX as collateral. Dopex makes use of the UMA Protocol to create these synthetic derivative tokens while using rDPX as collateral. These tokens differ from traditional on-chain derivatives since they are securely collateralized without an on-chain price feed.


The Token

The protocol is governed by its DPX token operating with the help of Arbitrum Network for collecting protocol layer fees and voting on protocol proposals. Apart from being a vanilla governance token, DPX also accrues fees and revenue from pools, vaults, and wrappers built on the Dopex Protocol after every global epoch. DPX has a Total Supply of only 500k tokens with 17% for Operational Costs distributed over a five-year period, 15% Liquidity Mining, 40% Platform Rewards, 12% Founders Allocation with a two-year vesting distribution, 11% for Early Investors, and 15% Public Sale. The secondary token rDPX has no supply cap but it does have mechanisms in place to avoid it from being valueless and provide intrinsic value to the token. Some of these mechanisms are rDPX being a need for future app layer additions to Dopex like vaults, supporting rDPX as collateral to borrow funds from Margin to leverage option positions, usable as collateral to mint synthetic assets, and boosted fee accrual from staking rDPX. The DPX and rDPX tokens are used for a variety of use cases aimed to enhance the platform’s usability and liquidity while offering an incentive to create a better alternative to current platforms’ price and PnL. Rewards from the Platform Rewards allocation are broken down into 20% of DPX rewards and 20% of RDPX rewards given to Single Staking Option Vaults. LPs will receive 60% of DPX rewards and 40% of rDPX rewards for providing liquidity to the DPX/ETH Pool with 20% of DPX rewards and 40% of rDPX rewards for participants in the rDPX/ETH Pool.


The Founders

Dopex is not a registered company and so does not have any public executives or official team members. Based on only who’s managing the codebase there are two developers WitherBlock and tztokchad currently working on the contracts. Both profiles are hidden making them unable to verify any previous work they’ve done.


Market Impacts

The DPX token launched in late June of 2021, just under $100 dollars due to the low initial supply. While the rDPX rebate token was released around $4. Up until July, the tokens were trending mostly sideways with minimal Daily Volume. August showed signs of appreciation as both tokens began progressively reaching new all-time highs. This trend has continued to place DPX at $2,200 and rDPX at $58 with both charts sharing similar market trends as every all-time high receives a 30% pullback like clockwork. The tokens are only available on Uniswap and Sushiswap giving buyers thin liquidity options at the moment. Of the 500k Total Supply, only 150k are currently in circulation to give DPX a Total Market Cap of $350M with a $61M TVL on the platform. The sister token rDPX has a current supply of 2.2M giving it a Total Market Cap of $128M. In the social circles, Dopex has gained some moderate attention with a Twitter following of 13k, Discord server of 6k, and Telegram group of 1k. Unfortunately not much has been done with Github since the project’s release.



Dopex appears to be trying to wear many different hats all at once. With some of the fairest token allocations, any of us have seen in a very long time. I mean, when was the last time you saw a Public Sale getting a bigger allocation than Pre-Sale participants and Team. Because I’m drawing a complete blank. But, at the same time, they introduce a very limited Max Supply to artificially boost the value of each token. There’s simply no need to have such a low amount of tokens on the platform and will only ever lead to constant supply vs demand squeezes. Dopex is also catering to a very niche market. I’m willing to bet a couple of thousand Sats that the majority of you reading this have never traded options and essentially will never have the desire to. With the minimal effort put into the codebase by existing developers, touching it once every 30-90 days is disconcerting.



Dopex is a welcomed new take on DeFi Option Trading despite lacking a bit on the execution. Understandably, the move to operate on Layer-2 solution Arbitrum is necessary for some mechanisms to operate properly in this type of execution environment. But, it can be a bit of a learning curve for any new users that want to use the protocol. Dopex Protocols’ current form really doesn’t offer many options for new or even existing users to play around with. Only the native DPX and rDPX tokens have vault and farming options available. With all the available options users have to farm across hundreds of protocols, Dopex has a long way to go before cutting out a respectable chunk of the market share.


Until next time, remember that the only guarantee is BTC. So keep stacking that Satoshi.

-Jesse Koz

Follow Jesse on Twitter

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