DN is a topic that everyone on the JPEGd Discord should already understand. If you don’t, you’ll understand more by reading through this opening discussion. With that short preface, I hereby make a tongue-in-cheek-and-yet-utterly-serious proposal regarding DN.
DN is powerful, and in the right hands can swell one’s weenis. With the presumed passing of the JPEGd Index PIP, I think we all should think about what DN can do for our collective weenii, particularly when combined with an index and the potential for a future perp market.
“Wot?” I hear you say. “DN is for autists and pervs, not indexes and perps.”
To which I reply that you are a filthy animal, and I am talking about Delta Neutrality.
DN (Delta neutrality) comes from the Greeks, and while those dirty buggahras kept their weenis options open, I am strictly talking about using the concept of DN as a way to enhance JPEGd’s utility as a platform.
In short, DN means that you have one thing in one hand and another thing in the other. If the thing in the first hand shrinks – perhaps due to the chill of a crypto winter – the thing in the other hand swells in size by the same amount. It’s a very basic hedge practice, and if you look it up on the interwebs you can find much better and more detailed explanations than I could give you here. Use the search terms “Lemon Party” or “Goatse” .
With the advent of a potential first index at JPEGd, it strikes me that we could expand potential users of indexed products by detaching the rise and fall of the component NFT prices from the potential to earn based on the yield offered. Certainly many degenerate weenii will want to expose themselves to the flighty whims of Pudgy Penguins, the incessant up and down of howling Apes, or perhaps even the future potential of a sassy Milady, but other investors might prefer to disassociate themselves from all of this potential stress and focus on yield.
And this is when DN comes in. DN incurs a cost, of course, but by removing the price of ass(ets) from the equation, it allows investors to concentrate fully and fulsomely on the deliciously juicy yield and nothing else. A perp market allows an index to take a simultaneous position to create an almost perfect DN position, placing the offering directly in front of these investors’ eagerly grasping hands.
Of course an internal perp market would let individual investors each address DN as they see fit, but let’s face it, most people cannot handle DN, so leaving DN in the soft hands of professionals with training, skill, and tools is attractive to many who understand that their coarseness and lack of finesse means that although they could try, they could really fuck DN up by doing something wrong.
One more aspect of DN is that any appropriate perp market would work, so by removing or reducing ass(et) movement the platform can work with much more degenerate ass(ets), still finding the sweet spot without ending up in a sticky mess. It could even possibly be done in a contract in such a way that a greatly expanded group of asse(t)s could be presented with forced participation in a perp market as a condition of entry, and where such participation would seek to not eliminate, but simply limit downside risk. In such a scenario, the asse(t)s would still bounce around, but the weenis would stay safe and happy because a tilt towards DN would dampen the bouncing to a controllable level.
For your kind consideration and gentle admonition.
