Carmine Protocol

Carmine options protocol

Options AMM that allows any user to buy and sell options at a fair price.

For crypto funds, traders and investors who need to hedge their portfolios or trade options, this options AMM will provide a possibility to do so. Different from competitors, this AMM allows for selling specific options directly.

Set up

• Clone this repo with git clone --recurse-submodules (Protostar uses submodules)
• Cairo quickstart
  • On a M1 Macbook, fastecdsa build might fail; https://github.com/OpenZeppelin/nile/issues/22 might help.
• Install Protostar
• setup a virtualenv, install requirements.txt...
• make build; make test

Current State

Just started building.

Documentation

High level docs here. Code docs will be published soon

Other Links

• Twitter
• Web
• Discord
• Docs

Demo

We are building a simple demo.

What can and can't the demo do

The demo is meant to showcase the pricing model that sits at its core. Ie it shows how the internal metrics are updated and how the prices are created, everything else is heavily mocked.

It assumes only one currency pair is being used.

The demo is initialized with one fixed priced of the underlying asset equal to 1000.

The options are created as follows

• strike price 1000 and maturity 1644145200 (Sun Feb 06 2022 11:00:00 GMT+0000)
• strike price 1000 and maturity 1672527600 (Sat Dec 31 2022 23:00:00 GMT+0000)
• strike price 1100 and maturity 1644145200 (Sun Feb 06 2022 11:00:00 GMT+0000)
• strike price 1100 and maturity 1672527600 (Sat Dec 31 2022 23:00:00 GMT+0000)

which means that only the 1672527600 maturity can be traded in the demo (the other fails).

Most of the numbers coming in and out to/from the demo are in a Math64x61 format (number 1.1 is send as int(1.1 * 2**61)).

Interact with the demo

Demo is at this moment deployed here 0x01989a6d90c470d05a3259680891a0180e7c5ab8050a52f22e50ce9facf84090 to simply use it, create env var

    export AMM_DEMO_ADDRESS='0x01989a6d90c470d05a3259680891a0180e7c5ab8050a52f22e50ce9facf84090'

and download the ABI file from the repo from build/amm_abi.json

    export ABI_PATH='build/amm_abi.json'

The demo was already initialized.

The example assumes that user's starknet account is existing and some tokens on it to pay for fees

export STARKNET_NETWORK=alpha-goerli
export STARKNET_WALLET=starkware.starknet.wallets.open_zeppelin.OpenZeppelinAccount

Add tokens to the pools

First possible interaction is to add fake tokens to the pool

    starknet invoke \
    --address $AMM_DEMO_ADDRESS \
    --abi $ABI_PATH \
    --function add_fake_tokens \
    --network alpha-goerli \
    --max_fee 50000000000000 \
    --inputs 123 230584300921369395200 461168601842738790400

the --inputs 123 230584300921369395200 461168601842738790400 says add 230584300921369395200 (100 * 2 ** 61) TOKEN_1 tokens into the CALL pool and 461168601842738790400 (200 * 2 ** 61) TOKEN_2 into the PUT pool, both for account 123. The tokens used are fake and virtual tokens.

To validate that the tokens were added, and to see how many were added in total (run before and after the addition to see the difference)

    starknet call \
    --address $AMM_DEMO_ADDRESS \
    --abi $ABI_PATH \
    --function get_account_balance \
    --network alpha-goerli \
    --inputs 123 1

where --inputs 123 1 for TOKEN_1 (call pool) and --inputs 123 2 for TOKEN_2 (put pool).

To validate that the tokens were added into the CALL and PUT pools validate the size of the pool before and after the addition.

    starknet call \
    --address $AMM_DEMO_ADDRESS \
    --abi $ABI_PATH \
    --function get_pool_balance \
    --network alpha-goerli \
    --inputs 0

--inputs 0 for call pool and --inputs 1 and put option.

Get price of an option

TBD

Trade option

Trading an option means that a note of the trade is made, the size of the pool gets updated and volatility gets updated.

    starknet invoke \
    --address $AMM_DEMO_ADDRESS \
    --abi $ABI_PATH \
    --function trade \
    --network alpha-goerli \
    --max_fee 50000000000000 \
    --inputs 123 0 2305843009213693952000 1672527600 0 1

the --inputs correspond to the following account_id, option_type, strike_price, maturity, side, option_size

You can check the call pool_balance with one of the above mentioned calls. The account_balance does not change (since it measures only the staked capital). You can also check the available_options with

    starknet call \
    --address $AMM_DEMO_ADDRESS \
    --abi $ABI_PATH \
    --function get_pool_option_balance \
    --network alpha-goerli \
    --max_fee 50000000000000 \
    --inputs 0 2305843009213693952000 1672527600 1

where --inputs contains option_type, strike_price, maturity, side.

Deploy demo

    protostar deploy build/amm.json --network alpha-goerli

Init demo

Have an account set up including the env vars, as described here

Deploy the contract

    protostar deploy build/amm.json --network alpha-goerli

From the deployment save the address

    export AMM_DEMO_ADDRESS='0x01989a6d90c470d05a3259680891a0180e7c5ab8050a52f22e50ce9facf84090'

and use the ABI file build/amm_abi.json

    export ABI_PATH='build/amm_abi.json'

To initialize the pool run

    starknet invoke \
    --address $AMM_DEMO_ADDRESS \
    --abi $ABI_PATH \
    --function init_pool \
    --network alpha-goerli \
    --max_fee 50000000000000

To add "demo" tokens to account (some id)

    starknet invoke \
    --address $AMM_DEMO_ADDRESS \
    --abi build/amm_abi.json \
    --function add_fake_tokens \
    --network alpha-goerli \
    --max_fee 50000000000000 \
    --inputs 123 100000 100000

To validate that tokens were added

    starknet call \
    --address 0x025aae26c014bc2f0ea8a2e7148697f4a04929ae30db65a72aaa860d746a51a5 \
    --abi build/amm_abi.json \
    --function get_account_balance \
    --network alpha-goerli \
    --inputs 123 1