DBOE - A Comprehensive Analysis & Prediction: Is it Truly the No.1 Non-Custodial Options DEX?

Today, I want to share my own personal research and study on DeFi Board Options Exchange (DBOE), a non-custodial decentralised options exchange (DEX) that launched in July 2023. This is by no mean an investment recommendation or the rating and the content are being reviewed and approved by any independent parties including authority. You need to read the disclaimer in full.

DBOE has been making waves in recent months, thanks to its groundbreaking feature, notably its innovative on-chain order book (CLOB) architecture and the assurance of zero counterparty risk.

DBOE positions itself as the premier choice for both crypto enthusiasts and traditional financial investors in the stock market. It strives to recreate a familiar trading environment, making it accessible for traditional financial investors to diversify their portfolios and venture into the crypto world. 

DBOE Trading Interface

One of the most intriguing aspects of DBOE is the ability to offer derivatives with zero counterparty risk, achieved through its pioneering CLOB and safe risk management. This is a significant breakthrough! It means that traders are shielded from the risks associated with counterparties failing to meet their obligations, a concern that has long plagued the DeFi space. I am genuinely excited about DBOE’s potential to revolutionise options trading in the DeFi landscape. Let’s delve deeper to ascertain whether they live up to their claims.

PART 1. DBOE’s Fundamental

Rate: 8/10 ⭐⭐⭐⭐

To begin, let’s explore their primary decentralised application (dApp). Upon first impression, it appears that DBOE offers a very unique and distinctive experience among decentralised exchanges (DEXs). The user interface, with its continuous price ticking and comprehensive analytics (including Profit and Loss tracking and 1-hour price movements), left a strong positive impression.

Now, Let’s Meet the Core Team!

Upon joining their Telegram group, I requested a brief introduction to the project, and I got a nicely written one-page overview. 

On the business front, the team boasts the following key figures:

• Vinh Vu: ex-Goldman, ex-SGX and ex-Binance Senior Product Manager

• Jonathan Seow: ex-SGX VP of Product Management

Their Linkedin profiles are genuine and reflect their hands-on experience from the derivatives and Product Management space. This is a real deal! 

Marketing, Risk Management, and Analytics are all handled by highly skilled professionals with over a decade of experience in multinational corporations, particularly in the ASEAN region.

What About the Advisors?

A quick Google search revealed articles authored by several advisors onboarded, for the example:

• Vladimir Barzov: A mathematical genius who achieved three Gold Medals at the IMO and boasts a track record as a crypto pioneer, as he founded one of the earliest crypto ventures in 2013. An MIT alumni and had worked for majors such as Goldman Sachs and Google.

• James Harris: Formerly the Commercial Director at CCData, and most recently with Zodia Custody in the same leadership capacity.

How Do They Engage with the Broader Ecosystem? 

DBOE seemed integrated well with the local ecosystem in Singapore particularly and established good partnerships with global partners including service providers.

• Membership in the Singapore Blockchain Innovation Programme (SBIP)

• Collaboration with notable customers including ChainLink, Chainalysis, BitQuery and Chainbase

• Ecosystem Partnership with Nautilus, under Zebec Lab

• Funding Partnership with Rootz Lab

This clearly shows promise, though it could certainly excel much further during the bull market. It should be noted that SBIP, backed by Singapore government-funding and featuring advisors from MAS and NUS, underscores the project’s seriousness in promoting the blockchain ecosystem in Singapore, this is serious stuff! 

PART 2: DBOE Products & Services Offerings

Rate: 9/10 ⭐⭐⭐⭐½

Let’s take a closer look at what DBOE commits to provide:

• Options DEX on Web & Mobile (iOS and Android)

• Decentralised Portfolio Margining & Lending Service

• Principal-protected Staking Service

• DBOE token Staking Service

• Paper Trading Options DEX

• Trading Interface Platform targeting TradFi Options Traders

Live Integration on: Polygon, Nautilus and Avalanche C-chain

Analysis and Evaluation:

DBOE's diverse product and service offering reflects a commitment to providing a diverse trading experience in the DeFi space. It’s worth noting that while some DEXs offer web-based and mobile platforms, DBOE stands out by providing both a web-based trading platform and dApp, catering to a broader audience right from the initial phase after launch. 

Only a few DEXs can achieve this, with dYdX being one example and DBOE as the second. Developing a mobile version represents a significantly greater commitment and investment for DEXs compared to a website-only platform. This is because creating mobile applications for decentralised exchanges (DEXs) is a complex and resource-intensive task. It involves maintaining security and functionality in a decentralised environment, catering to diverse mobile devices and operating systems, and meeting high-performance standards in cryptocurrency trading. This complexity stands in contrast to centralised exchanges (CEXs), which operate in more controlled environments.

DBOE Mobile App Interface. Source: DBOE Medium Post

Moreover, the project has the ability to engage a diverse user base, including everyday community members to Traditional Finance (TradFi) and crypto experts, demonstrating its adaptability and wide-reaching appeal.

Source: similarweb.com

I rely on Similarweb.com, my go-to tool in project research, for a comprehensive analysis of website traffic across DBOE, dYdX, and Deribit. As of Oct 04, DBOE has taken the lead, surpassing both dYdX and Deribit in several engagement metrics, although it apparently does lag behind in some aspects. Of course, this isn't a straightforward apples-to-apples comparison, given that all three exchanges cater to distinct target audiences and offer different products. At the very least, this traffic to DBOE implies some good product features delivering to what the users want hence achieving such an impressive outreach.

However, the competitive DeFi options trading sector demands agility and responsiveness. DBOE must continue to move fast to secure market share.

Now, on the flip side, I shared DBOE to my own network and also from some experienced TradFi friends (mostly banks and brokerages), I have a fair bit of feedback from them. As usual, those TradFi guys mentioned that UX/UI needs to be friendlier to them, some asked to have more Options with longer time to expiry and some even asked to launch Options on Altcoins (wow). 

So in short, I am listing them here:

Rate: 8/10 ⭐⭐⭐⭐

In exchange business, liquidity is the key. Let’s take a look at DBOE’s liquidity. Full disclosure: I have been subscribed to their weekly update mail list a while ago. 

Here are the key statistics summarising DBOE’s liquidity in the first two months post-launch (with some rounding from their weekly update):

Initially, the absolute figures may not seem exceptionally high, it’s important to remember that DBOE is still in its infancy, a two months old baby DEX. The impressive growth rates are a clear indicator of promise. 

For risk-takers comfortable with uncertainty and eager to explore new opportunities, investing in DBOE may hold promise. Conversely, if you lean towards a more risk-averse approach, dedicating time to thorough research or starting with a modest initial investment while building confidence and knowledge in crypto options can be a prudent strategy.

PART 4: DBOE Tokenomics

Rate: 7/10 ⭐⭐⭐½

DBOE's tokenomics feature a relatively well-rounded set of offerings tailored to different types of token holders: 

• Membership benefits: Token holders enjoy trading fee discounts and concessions on the exchange based on their token holdings (go and check it out on their gitbook website)

• Governance voting: standard governance model

• Stake to Earn: Token holders may elect to stake their tokens to perform the settlement price validation upon option expiry (daily or weekly) in return for payment.

First off, DBOE's tokenomics do not seem embed any kind of “Ponzi-like” schemes, demonstrating the project's commitment to ethical and transparent practices. In my view, their tokenomic scheme is fundamentally beneficial for the success of the project in the long run, though it may limit its ability to attract participants seeking solely quick and high returns. 

I have observed notable developments within the DBOE community. In June 2023, their Telegram group had approximately less than 10,000 members and today, it has over 30,000. Their group admin and mods have been responsive and enthusiastic, consistently providing quick replies to community members. On Twitter, DBOE has accumulated 20,000 followers, with the go-live announcement attracting 70,000 readers. These figures reflect positively on the project's reputation and its promising trajectory.

PART 5. DBOE CASH FLOW

Rate: 9/10 ⭐⭐⭐⭐½

DBOE sets the trading fee structure at a total 0.3% of traded value. To gain insights into potential revenue scenarios, let's explore three hypothetical situations based on DBOE's traded value: $1 million, $10 million, and $100 million.

• Daily Traded Value = $1M -> Yearly Revenue = 365 x $3,000 = $1.1M

• Daily Traded Value = $10M -> Yearly Revenue = 365 x $30,000 = $11M

• Daily Traded Value = $100M -> Yearly Revenue = 365 x $300,000 = $110M

The maths is easy here. Yearly revenue is about 1.1x the daily traded value.
 

How will DBOE token holders benefit from DBOE cash flow? 

It doesn’t look like you will benefit unless you actively participate in the 3rd membership feature in the tokenomic model. By contributing your sweat and hard work on a daily basis, you will be entitled to some of the revenue (of course you have to stake your tokens at first). 

Let’s work it out!

Assuming DBOE at a matured state will allocate 50% of its revenue to safeguard its final settlement process and assuming 50% of token holders stake all their DBOE holdings.

In this scenario, assuming DBOE holders and stakers diligently participate by voting in the final settlement process then they will receive back 50% of the total revenue (so 100% return since staking rate is also at 50%). How much is the expected dividend you could earn if you invest in public banks or exchanges nowadays? My best guess is 7% at max!

However, it’s crucial to note that DBOE does not offer dividends to avoid being classified as  a security. To earn a percentage of revenue, users must proactively participate in the final settlement process. However, this participation could serve as an enjoyable way for certain user segments (who knows?).

Overall

Rate: 9/10 ⭐⭐⭐⭐½

In conclusion, my subjective assessment on DBOE is positive and worth watching. However, it is crucial to acknowledge that DBOE is in its early stages, and the crypto market is renowned for its volatility and unpredictability. 

It’s certain that my research is far from being complete. For further study, you can visit their website at https://dboe.exchange.

Disclaimer:

The information presented in this analysis is intended solely for informational purposes and should not be interpreted as financial advice. It does not serve as a recommendation or encouragement to engage in buying or selling activities. Please note that I, the writer, also hold DBOE tokens. However, possession of DBOE tokens should not be regarded as an endorsement or assurance of any specific project or investment opportunity.

Prior to making any investment decisions, it is imperative to conduct your own research and consult with a qualified financial advisor. Please be aware that cryptocurrency investments inherently involve risks, and it is crucial to comprehensively comprehend and evaluate these risks before proceeding. I hereby disclaim any responsibility for actions taken by readers based on the information provided in this analysis.

HedgeLah