Ribbon Finance (RBN)

From Week in Ethereum (23-2-2021):

"Ribbon finance is on mainnet with a strangle option strategy - an aggregator of Hegic and Opyn"

Basics

• Based in:
• Started in / Announced on:
• Mainnet release: 16-2-2021

History

• Announced a governance proposal to merge Ribbon into Aevo, a derivative L2 and move RBN over to AEVO (7-2023).

Audits & Exploits

• Bug bounty program can be found [insert here]. Ribbon offers $50K with Immunefi (28-1-2022).
• Scored a 77% on DeFi Safety (11-4-2022), with the comment:

"In both updating their own documentation as well as making a few things clearer for our own analyses, we're elated to tie a bow on this one and give them a well-deserved passing score. Ribbon's passing grade comes from focusing on clear oracle information. This is especially vital as this is a derivatives exchange, making the data the contracts are dependent upon incredibly important. Since they're based on Opyn, they inherit the tried and true Chainlink.

We're looking forward to reading more documentation relating to their pause control and their contract timelock features. This will double-knot the bow that ribbon is tying up for us. All in all, a good improvement (10% +) from a committed team. We're especially grateful to the Discord community member who facilitated this improvement and we look forward to many more scoring increases in our future (from Ribbon and others)!"

• Previously scored 63% (28-1-2022):

"At over 10 transactions a week, this contract is relatively active. Major contract functions are covered. With a TtC of 777%, this protocol has clearly tested its code. No test report was found. Ribbon has not undergone formal verification. Ribbon V2 was audited before and after launch by OpenZeppelin and ChainSafe.

With the comment: "Although they scored highly in Code and Team as well as Documentation, the protocol had zilch documents provided on Oracles, and almost nothing for Access Controls."

Bugs/Exploits

• From DeFi Safety (28-1-2022):

"$2.5m in Ribbon tokens were taken then returned in a Sybil attack."

Governance

Admin Keys

• Update: Strike Price and Open Auction parts are now decentralized since V2 (10-2021).

• From their blog (12-3-2021):

"As you can probably tell, there are a few pieces of this process that are more centralized:

1. Managers have sole discretion over strike selection
2. Managers and selected market makers decide on option prices off-chain (OTC).
3. We have whitelisted specific market makers who we are partnering with

Although we are starting with this, we plan to decentralize these functions over time once the vaults are more battle tested on mainnet. For example:

1. We plan to decentralize the function of the manager to a group of strategists that are voted on by the community, including better incentive mechanisms for encouraging good management of the vault
2. We plan to open up the option buying function to anyone in the community through an auction-like mechanism, and remove whitelists."

• From DeFi Safety (28-1-2022):

"Information is easily located. No contracts are labelled as upgradeable/ immutable. No pause control was found. There was no timelock documentation found."

DAO

• Ribbon Finance considers paying a $500k bounty to the whistleblower of the Divergence incident (19-10-2021).

Token

Utility

• Ribbon Finance veRBN (Curve style tokenomics) went live (3-2022).

• A governance token. From EthHub (1-6-2021):

"The RBN token aims to achieve the following goals: stewarding the development of the protocol, align incentives between Ribbon stakeholders, and unite all current and future Ribbon products under a single umbrella."

Technology

• Whitepaper can be found here.
• Code can be viewed here. From DeFi Safety (28-1-2022):

"At an astonishing 165 branches with 143 commits, Ribbon's development is clearly well wrapped and won't be getting cut short any time."

Implementations

• Built on: Ethereum, Solana (26-1-2022) and Avalanche (28-1-2022). Uses Opyn (4-2022).

Upgrades

• V3 got announced (28-4-2022).
• From Yield Farmer (25-8-2021):

"Ribbon Finance announces the details of its V2 protocol, which offers an optimized vault system and improved decentralization guarantees."

Oracle Method

• Pyth is mentioned as oracle (7-3-2022).
• The below score got update, from DeFi Safety (11-4-2022):

"Ribbon uses Opyn, and so inherits Chainlink oracle usage. Software function documentation is indetified in Opyn's documentation. Ribbon uses batch auctions, which eliminate front-running by using just one clearing price. Ribbon inherits Chainlink, which ensures no flashloan attacks can be applied to Ribbon."

• From DeFi Safety (28-1-2022):

"No oracle information was found."

Their Projects

• From their mainnet announcement (16-2-2021):

"We are focused on products to tackle four broad categories of opportunities:

1. Volatility. Products that let users long or short volatility of various cryptoassets for speculation or hedging purposes
2. Yield Enhancement. Active and passive products that let users earn high yields (3-digit APY) by stacking yield-bearing instruments with writing options
3. Principal Protection. Investment products that guarantee the user will get their money back, plus potential upside. These can be constructed through a combination of fixed-income products and options
4. Accumulation. Products that let users accumulate their favourite assets over time, through strategies such as automated put option selling & reinvesting the yield into accumulating more assets"

Strangle

• From their mainnet announcement (16-2-2021):

"Today, we are launching Ribbon on mainnet, with the first product being a Strangle option, that lets users long ETH volatility. This product combines a put option and a call option at different strike prices, allowing investors to profit when the price of ETH goes above or beyond some thresholds.

To construct this Strangle, we source liquidity from the two foremost options protocols on Ethereum — Hegic and Opyn. Ribbon finds the cheapest prices on both venues for the put and call option, then purchases the options on the users’ behalf and packages them within a smart contract. This is the first multi-protocol option construction on Ethereum."

Theta Vaults

• Contrary to the announcement, which already spoke about their 'first product', Ribbon Finance now says Theta Vaults are their first product (12-3-2021):

"The first product that Ribbon is creating is called a Theta Vault, which is a yield-focused strategy on ETH and WBTC. The first Theta Vault will run a covered call strategy, which earns yield on a weekly basis through writing out of the money covered calls and collecting the premiums. Theta Vaults in its present design relies on Opyn oTokens. oTokens are ERC20 token representations of an options contract, where each of them have a strike price and expiry. Owning oTokens is functionally equivalent to owning an options contract. This gives the oToken holder the right to redeem some amount of the underlying asset if the strike price is hit."

Ribbon Treasury

• Basically the same as the Theta Vaults, but then catered towards DAO treasuries (2-11-2021).

Roadmap

• Can be found [Insert link here].

Pros and Cons

Cons

• Got into CT news due to airdrop farming on a huge scale (9-10-2021). It first came to light due to Ribbon Finance:

"This @divdotvc analyst @_bridgeharris has made 652 $ETH and counting from @ribbonfinance airdrops, quite impressive. finding wallets like their's and copytrading them is probably the best way to make it tbh. the strat was just deposit .1 eth in ribbon theta vault 140 days ago but across many many wallets"

• Divergence quickly released tweets saying they were in crypto for more than money, realized they went to far (dumping the farmed token directly into ETH) and that they would send the ETH to the Ribbon DAO.

Team, Funding, Partners

Team

• Full team can be found [here].
• Julian Koh; co-founder & CEO
• Two team members publicly identify themselves, but this information is not listed anywhere and required additional research (28-1-2022).

(:

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