[1IP-05] Add Derivative Aggregation to 1inch Network

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Simple Summary

This proposal seeks to add derivative aggregation to the 1inch Protocol. Specifically, it calls for the following additions:

• Aggregation protocol is expanded to include derivatives
• Add derivative aggregation to the 1inch smart contracts, 1inch dApp, and 1inch API
• The first derivative supported will be Opium’s TURBO products (call options)

Abstract

This proposal aims to signal to the 1inch Foundation that the DAO wants to add derivative aggregation to the 1inch Protocol – specifically, the 1inch smart contracts, the 1inch dApp, and the 1inch API. Adding derivative aggregation to the protocol will require technical effort from 1inch Labs, and will require the support of 1inch Foundation.

Motivation

1inch is currently the leading decentralized exchange aggregator and has made a reputation of providing the best prices on token swaps. With the rise of derivatives in the DeFi space, there is a new product niche that 1inch is perfectly positioned to capitalize on: the aggregation of derivative products.

By implementing this proposal, 1inch will solve the problem of fractured derivative liquidity (just like it previously solved fractured token liquidity).

Specification

This proposal serves as a signal from the 1inch Network DAO to the 1inch Foundation and 1inch Labs. Once passed, the 1inch Network DAO calls for the 1inch Foundation to allot resources to add derivative aggregation to the 1inch Protocol and dApp, and for 1inch Labs to add derivative aggregation to the 1inch smart contracts and 1inch API.

Opium’s TURBO product is a short-dated call option:

• Community / users can “write” covered calls by pooling their tokens in order to earn yield (collect call option premiums)
• Takers (professional market makers) can buy the call options in order to gain leveraged exposure to the underlying asset

Adding Opium’s TURBO options to the aggregation UI will require coordination with the Opium community to ensure a smooth integration.

Rationale

The architecture of the aggregation protocol has not yet been defined.

Opium’s TURBO product was chosen as the first derivative supported because the Opium community was offering to help with this integration via documentation and SDKs.

Considerations

The specifics of launching an aggregation protocol will not be defined until the 1inch Foundation supports the proposal. Like all new modules they have launched, a complete security review and audit should be performed before this change is implemented on mainnet.

Since all work described in this proposal will be organized by the 1inch Foundation, this will not cost any treasury funds.