Polynomial is a decentralized options protocol that automates options strategies fully on-chain.
Polynomial automates decentralized options strategies to create products that deliver passive yield on various crypto assets. The protocol currently has a call selling and a put selling vault. The strategy automates weekly options selling and generates a return on its deposits. To compound returns over time, the vault also reinvests the earned yield back into the strategy. For call selling vaults, there are two variations: asset collateralized and sUSD collateralized. Asset collateralized vaults use the respective asset itself as collateral for option selling. The premium is thus collected in that same asset and is auto-compounded. For example, in the sETH call selling vault, the asset used as collateral is sETH. This vault is typically for users who want to stack more of a particular asset. The sUSD collateralized vault uses sUSD as the underlying collateral for option selling. The premium here is collected in sUSD and then auto-compounded. This vault is generally for users who seek pure profit and don't want the volatility associated with the respective asset. Polynomial vaults sell the newly minted options to Lyra's AMM in batches to collect yield. The vaults use synthetic assets created on Synthetix.
Polynomial vaults charge a 10% performance fee and a withdrawal fee (only if the vault has an active position). If the vault strategy is profitable and the options expire worthless, a weekly performance fee is collected on the premium earned. If the strategy is unprofitable, then no fees are charged. At the end of each weekly epoch, the option selling vaults have a 2-hour gap before selling resumes in which no withdrawal fees will be applied.
You can generate yield by depositing crypto assets into Polynomial's vaults to collect option premiums.