What is Ribbon Finance?
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🟢 The simple version
Plain English — no jargon. Start here.
Ribbon Finance creates automated options vaults — you deposit ETH or BTC, and the vault automatically runs a covered call strategy (selling your right to buy the asset at a higher price) to generate weekly yield, making sophisticated options strategies accessible to anyone.
What covered call options are
A covered call is an options strategy: you own an asset (ETH) and sell someone else the right to buy it from you at a specified price (the "strike price") by a specific date. For selling this right, you receive a premium immediately. If ETH stays below the strike price, your buyer does not exercise their option, you keep the premium, and you keep your ETH. If ETH rises above the strike price, your buyer exercises, you sell your ETH at the strike — you benefit from the rise up to the strike but miss gains above it.
The strategy generates consistent premium income in sideways or slowly rising markets at the cost of capped upside. Ribbon automates this strategy on-chain, running the vault weekly so users never need to understand options mechanics themselves.
How Ribbon Vaults work
You deposit ETH into the Theta Vault (Ribbon's name for its DOV — Decentralised Options Vault). Every Friday, the vault sells weekly covered call options on its ETH holdings at a slightly out-of-the-money strike price. The options are sold to market makers in a batch auction. Premium received flows back to vault depositors as yield. If ETH rises dramatically above the strike, the vault loses some upside — the options are exercised and ETH is sold at the strike price.
Aevo — Ribbon's successor protocol
Ribbon Finance launched Aevo — an on-chain options and perpetuals exchange — as the evolution of its DOV infrastructure. Aevo is a custom Ethereum L2 (built on OP Stack) specifically for high-frequency options trading. RBN tokens were merged into AEVO tokens as part of this transition in 2023. The page covers the Ribbon/Aevo ecosystem including this transition.
Is it legal in India?
Yes. RBN/AEVO is a VDA under Indian law. 30% tax and 1% TDS apply. See India regulation.
🟡 A bit more detail
For when you want to go a little deeper.
DOVs — Decentralised Options Vaults
Ribbon pioneered the DOV category. Before DOVs, running an options strategy required either using a centralised exchange (custody risk) or deep options market knowledge. DOVs abstracted this: deposit an asset, receive yield, accept the strategy's risk profile. The DOV model attracted billions in TVL during 2021-2022 because it offered yield that was genuinely derived from options premium (not token inflation), priced fairly by real market makers.
Ribbon's Theta Vaults at peak held over $300 million in ETH, BTC, AVAX, and stablecoin covered call and cash-secured put strategies. Large ETH holders used the vaults to generate consistent yield (4-15% APY depending on market volatility) on holdings they planned to keep long-term. The DOV model influenced the creation of dozens of competitor protocols including Thetanuts, Friktion, and StrikeX. Aevo launched as a full on-chain options exchange with an order book, competing with Deribit (the dominant centralised options exchange).
Aevo — the on-chain options exchange
Aevo is an Ethereum L2 (OP Stack) built specifically for options and perpetuals trading. Unlike DOVs (which are passive strategies), Aevo is an active trading exchange with an orderbook, real-time pricing, and leverage. Options on Aevo are European-style (exercisable only at expiry) and cash-settled in USDC. Perpetual futures are also offered. Aevo's OP Stack foundation gives it fast block times and low transaction fees appropriate for high-frequency trading.
Key Ribbon/Aevo metrics: Aevo options trading volume (vs Deribit, the dominant options venue), active open interest, vault TVL (still active alongside the exchange), and AEVO token governance participation. The core question: can a decentralised options exchange take meaningful market share from Deribit, which has dominated crypto options trading? Live data: CoinGecko · Aevo.xyz.
🟣 The full technical picture
For the technically curious.
Options mechanics: Black-Scholes and implied volatility
Options are priced using models that incorporate the underlying asset price, strike price, time to expiry, and implied volatility (IV). IV is the market's expectation of future price movement embedded in the option premium. Higher IV = higher option premium (options are more valuable when the asset is expected to move more). Ribbon's DOVs sell options at strike prices above the current price (out-of-the-money) to balance premium income against probability of exercise. The premium is priced by the market-maker auction, which incorporates the current IV for that asset.
Source: Ribbon Finance documentation. docs.ribbon.finance · Aevo documentation: docs.aevo.xyz
Vault strike selection and risk
Ribbon's vaults select weekly strikes using a target delta — typically 0.1 delta (meaning a ~10% probability that the option expires in-the-money based on market-implied volatility). This strike is typically 5-15% above the current ETH price. The vault is managed to avoid high delta scenarios that would result in exercise. During extreme market events (ETH +30% in a week), the options can be exercised, delivering ETH at the strike price — the vault misses the upside above the strike. In practice, this happens rarely but the risk is genuine and disclosed clearly in the DOV model.
Ribbon's auction mechanism: every Thursday, the vault's options are auctioned to qualified market makers via Paradigm (a crypto options OTC network) or Airswap. Market makers submit bids specifying the minimum premium they will pay for the option. The vault accepts the highest bids that cover the full notional. The settlement uses Opyn's oTokens (ERC-20 representations of options contracts) on Ethereum. oTokens expire on Friday at 8:00 UTC (when Deribit's weekly expiry occurs — ensuring Ribbon's options are priced consistently with the broader market). The entire process — strike selection, auction, settlement — runs autonomously via smart contracts with no human intervention from the Ribbon team.
Key facts
- Product: DOVs (automated options vaults) + Aevo exchange
- Primary strategy: Covered calls + cash-secured puts
- Technology: Opyn oTokens (vault options), Aevo OP Stack (exchange)
- Token migration: RBN → AEVO (2023)
- Exchange: Aevo (OP Stack L2, options + perpetuals)
- Founded: 2021 (Julian Koh, Ken Chan)