Vitalik: Building Index Tracking Assets Based on Options Rather Than Debt is Worth Considering and Trying

Odaily reported that Vitalik stated on platform X that building index tracking assets based on options rather than debt is worth considering and trying, using options as the foundation of DeFi instead of CDPs and liquidation mechanisms. This design can avoid severe and global liquidation effects caused by extreme price volatility, allowing exposure to the index to deviate from the preferred exposure in a smoother, quadratic manner. Its key advantage is that it does not require an instant oracle and can operate based on slow oracles, the type of oracle used by prediction markets. An obvious disadvantage of this design is the need for periodic rebalancing, and it remains to be clarified whether rebalancing can and how it can be sufficiently resistant to slippage.

Vitalik added that, compared to relying on oracle mechanisms that must provide answers in real-time and could be induced to give incorrect real-time answers within a timeframe without manual remediation, he considers holding algorithmic stablecoins placed within such mechanisms to be safer.