Buffer Finance Review; Understanding How The AMM for Option Trading Functions

Source : coinquora.com

Buffer finance is a gamified non-custodial AMM for trading options. It works around the idea of allowing investors to buy assets by leveraging the concept of liquidity pools. The Buffer finance network functions as an automated market maker since buyers don’t directly link with sellers. Instead, the buyer takes a position using the liquidity pools available. 

Buffer was launched to bridge the gap noticed in cryptocurrencies options trading. Therefore its development resulted in the creation of a Defi project connected with Gamefi to enhance trading. Together with trading, there are prediction games that earn rewards. 

The platform supports many assets that include Amazon, Apple, BTC, ETH, ADA, BNB, DOGE, MATIC, SOL, and Tesla. 

Using Buffer, investors can trade options as if they’re taking part in a game. Users of the platform and speculators can monetize their predictions on crypto-assets prices. Moreover, they can bet against liquidity pools and enjoy auto payouts from winning bets. 

How Does It Work?

The network connects three parties, including liquidity providers, option buyers, and token holders. Liquidity providers ensure the liquidity pools have enough funds to execute transactions. They offer some liquidity in the available pools, and in return, get $rBFR. Additionally, the liquidity provided will help ensure every put or call option is handled timely. 

There are three liquidity pools available for the users of Buffer, but only one(BNB/USD) is fully active. The rest connected to ETH and BTC are under beta test programs. Liquidity providers will earn APRs of up to 138% in profits. 

The second party option buyers set a strike price and option size they need. Afterward, they cap a premium required and get their options. 

The third group is token holders who will take part in several of the network’s activities. Each of the token holders can be a liquidity provider, token staker, and can take part in voting. 

The main aim of the Buffer finance platform is to help spot traders and speculators make money. Anyone can become a participant in this network by doing the following things; 

  • Buy and hodl $iBFR token to be part of the revenue share forever. 
  • Be a liquidity provider in the pools like BNB, wETH, and wBTC. They will add other BEP 20s in the future.
  • Buy insurance on BNB holding. 
  • Predict BNB price actions
  • Buy customized options

$iBFR

The flagship asset of the Buffer ecosystem is the native token $iBFR. $iBFR leverages the Binance smart chain; hence it’s a BEP-20 token. It powers the concept of option selling while also providing rewarding options. The Buffer finance network caps the total supply of $iBFR tokens at 100 million.

According to Buffer Finance, you can use the token in the following ways; 

  • Governance. Token holders will take part in voting for development proposals. 
  • Reward. Buffer tokens will help reward investors for persons staking. You can stake $rBFR tokens and earn the $iBFR.
  • Investors can earn $iBFR tokens as liquidity mining incentives for adding liquidity to BNB and other pools. 
  • Holders of this token will be earning discounts on predicting game ticket prices.
  • Help in buying and burning the tokens to make them deflationary

Buffer Finance: Products Offered

Prediction Games

Buffer finance is a gamified network. Speculators can predict prices and bets against liquidity pools. The assets in which speculators can predict prices and earn rewards include BNB, ETH, and BTC. 

Customizable

Unlike other projects, Buffer makes it possible for investors to customize their strike price and options expiry dates. 

No Counterparty

Most options trading networks work with a counterparty. Counterparties come with risks, including lacking liquidity. But, Buffer works with liquidity pools. Hence reducing counterparty involvement and ensuring liquidity is always available. 

Bidirectional Liquidity Pools

The platform gives bidirectional liquidity pools. Investors can write put and call options with the same BEP-20 pools.

Insurance

Investors can buy insurance on BNB holding for protection against price fluctuations. The option for insurance is currently under development.

Buffer Finance: The Team

Buffer has a team of experts in different fields who all combine their efforts to develop the platform further. The co-founders, Mr. Ric Feynman and Heisenberg, have been involved in crypto options for three years. 

Other team members include Pythagoras, Tesla, Curie, Rubin, Newton, and Maxwell, who handle different projects. This large team, each with individual expertise, displays Buffer’s commitment to growth. 

The Partnerships 

Buffer has partnered with other projects in order to reach the wider population. One of the top collaborators is Cryptobuddy, a crypto event tracking platform that offers research programs. Other partnerships include lithium, BSC News, Berry, BSC Daily, and Super Launcher.

The Security

Buffer finance fostered its security by seeing through the auditing of its smart contract systems. Solidity finance and Peckfield Shield are the security startups that audited Buffer smart contracts.

Although according to the two auditing firms there were no serious issues, Buffer intends to take part in another audit from senior auditing networks. Extra security comes from the knowledge that this platform has insurance funds. They will be working on improving safety with future developments and upgrades.

Buffer Finance: The Benefits and Drawbacks

Buffer Finance has its benefits for investors, including; 

  • Custom options
  • Non-custodial
  • Trustless
  • No KYC
  • Rewards in yield farming and staking

Of course, with the benefits also come some downsides. At the start, Liquidity pools may run the risk of losses due to sharp price declines on assets. Moreover, the developers of this platform aim to maintain a low market cap. A low market cap can reduce the growth and adoption speed of the platform. 

Final Word

The Buffer Finance network is a decentralized AMM for options trading. By combining gamefi and Defi, this platform can decentralize services for the traders who wish to explore numerous sides of options trading. It combines several features and components to ensure it can give rewards. Prediction games, customizable, partnerships, and others will impose the reach. 

According to the roadmap, the platform has a number of plans for the near future. Some notable future plans include insurance incentives, NFT, DAO, and listing on CEX among others. Investors can participate by buying, hodling, staking, and sharing predictions.