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The DeFi umbrella alone covers a multitude of smart contract use cases from blockchain voting and decentralized lotteries to yield farming and of course decentralized exchanges. This guide covers how Chainlink Price Feed oracles can be used to empower a simple DeFi exchange for call options in Solidity on the Ethereum mainnet. This implementation can also be easily modified for put options as well. A powerful feature of this options exchange is that all value is transferred through the contract, without any trusted party, directly between parties. There is no middleman, only the contract and decentralized Chainlink Price Feeds, in realization of the ideals of DeFi.
In the process of developing a DeFi options exchange, we’ll cover:
- Comparing strings in Solidity
- Fixed point decimals as integers
- Creating and initializing an interface to a token, such as LINK
- Transferring tokens between users/contracts
- Token transfer approval
- SafeMath
- Smart contract ABI interfaces
- Enforcing transaction states with require()
- Ethereum msg.value and how it differs from token value transactions
- Casting between int and uint
- Payable addresses
- And of course, using Chainlink’s aggregator interface to retrieve DeFi price data
The code for this guide can be found on GitHub and Remix. Before we get started, a quick introduction on what options contracts are: an options contract gives you the “option” to execute a trade at an agreed-upon price until a certain time. Specifically, if that contract is for the option to buy shares/tokens/etc, it’s known as a call option. Additionally, the code shown within could be easily repurposed for a put option. A put option is like the inverse of a call, rather than a contract to be able to buy an asset, a put is a contract that facilitates selling at a pre-agreed price. Some terms:
- Strike: The agreed-upon price at which the asset ...
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