Friktion

Options

Friktion was sunset on Jan 25, 2023.

Friktion was a decentralized yield optimizer built on Solana. Its vaults automate complex strategies like automated hedging or options selling.

Risk Rating
Watch Out
Protocol Code Quality
Protocol Maturity
Protocol Design
What is Friktion?
What we like
Friktion's option vaults (Volts) help investors make directional bets on assets without requiring specific technical knowledge.
What we like less
Friktion currently has no timelock or governance process used to secure program upgrades, and there is not yet a public token to facilitate governance decisions.
What it means for you
Offers you offensive and defensive strategies through decentralized options to help you earn recurring yield and hedge your investments.

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Information
Exploit/Hacks
None
Info
Key Metrics
  • TVL: $0 (Rank #309)
  • TVL Ranking by Options: #0
  • Blockchain: Solana
  • Chain TVL
    • Solana: $0
Risk Assessment
Watch Out
Protocol Code Quality
  • Code reviewed by at least one experienced auditor; Kudelski audited in May 2022
  • Public team promotes accountability
  • No documented protocol hacks since launch
Protocol Maturity
  • Core protocol launched recently in 2022; maturity less than three months increases technical risk as smart contracts are not battle-tested
  • Top 10% by total value locked reduces risk
  • Core contracts are fully immutable
  • Timelock is at least 48hrs, which provides users with sufficient time to exit if any malicious upgrades are approved
  • Several critical governance issues documented
  • No governance token and/or contracts are fully immutable
Protocol Design
  • No death spiral concerns
  • Solid controls to prevent oracle price manipulation
  • This protocol is susceptible to risks related to decentralized options, such as loss of principal if they were to expire in-the-money (ITM)
Things to know about Friktion

How Friktion works

Friktion provides five options strategies that are suitable for different market conditions, including covered call, cash secured put, range-bound, delta neutral, and capital protection. These strategies execute weekly and bi-weekly options contracts for a variety of crypto assets. Each strategy vault, or Volt, is time locked, which means deposited funds can only be removed as the weekly options expire and before the following week's contract begins. These cycles are called epochs and range between 1 to 2 weeks depending on the asset or strategy. Users who deposit into a Volt receive fTokens in return which represent your share of ownership in the Volt.

How Friktion makes money

Friktion Volts use a fee structure that mutually aligns incentives between users and the platform. The platform charges a 10% to 15% fee on profitable positions and a 0.1% fee on withdrawals (on deposit value). In this set up, the user relies on Friktion to select an ideal strike price each week to create a profitable position. And Friktion is incentivized to properly manage risk as they only earn fees when the vault makes a profit. Some Volts also charge an annualized execution fee of 0.5% to 1% per epoch.

How you make money on Friktion

You can generate yield by depositing assets into Friktion's Volts to collect option premiums. For more advanced DeFi users, you can leverage the protocol's other option strategies to generate yield based on your market outlook, whether range-bound, delta-neutral or volatile markets.

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