Introduction

Opyn is definitely my favorite DEFI protocol and I'm not gonna lie that after about a year i still having a hard time understanding how it works! But I'm sure I'm not alone on this, and the fact that Opyn Devs put a lot of time and effort to create heavy educational content on different aspects of their product proves that. Their discord is full of links to Twitter threads, medium articles and resources to help their users better understand the possibilities that are provided by their various products.

More than anything else, Opyn is known as a Option trading protocol where you have bunch of opportunities like bids, calls, sells, etc that I quitted the effort to know what they do! If you are an option trader, you know all of this, and you better use Opyn since you simply have no better choice as they are rendering the top product on market. But I do know something about Squeeth which is their latest and popular product and I will talk a bit about this before going to analysis.

what is Squeth?

Squeth stands for squared ETH (Or ETH^2). It's an index which tracks the price of ETH multiplied by itself. Meaning that if ETH price is 1000$ the Squeth index price is 1000000$. So if price of goes up 20% to 1200$, Squeth index is up by 44% to 144000$. Alternatively if the price of ETH goes down by 20% to 800$, Squeth index is down by 36% to 640000$.

what is oSQETH?

It is an ERC-20 token which expose you to Squeth index price. Meaning that if you hold oSQETH you are long on ETH and can trade your oSQETH token with any pair that has a pool. You need to note that Price of oSQETH is not equal to ETH^2, but its price is determined with the supply/demand for it as any other open traded asset. The moment you buy or mint any amount of oSQETH you are exposed to ETH^2 price based on the amount you bought.

What is it good for?

you should see Squeth as a financial tool which provides different option trading strategies and have some serious advantages comparing to other option trading strategies. See image below provided by Opyn Team:

The most important advantage is the it won't get liquidated since ETH^2 never equals to 0 unless ETH price goes to 0. Your gain will exponentially grow as the price goes up, comparing to linear growth of 2x Leverage.

Methodology & Analysis

We are trying to find out how much is the TVL of Opyn Squeth contract. And also explaining were does oSQETH draws its value from. The second part is basically all of discussions that made previously and will be made further into analysis. But as for the first part, I need to explain my findings, to render the TVL I calculated.

Well, Opyn Squeth users have 3 ways to mint oSQETH:

• Putting ETH as collateral (Minimum 6.9 ETH) and Mint & Sell oSQETH if they want to go short on ETH and oSQETH.
• Mint and LP on Uniswap by putting ETH as collateral to gain Pool Fees + exposure to ETH and Squeth.
• Also can Put their Uniswap LP token of ETH/oSQETH NFT as collateral and mint more oSQETH.

These all are direct interactions with oSQETH controller contract which is:

0x64187ae08781b09368e6253f9e94951243a493d5

Based on this assumptions I calculated all ETH deposited into contract subtracted by ETH withdrawn, to see how many ETH is Locked now (assuming this locked ETH is necessary to mint oSQETH, thus more ETH locked more the price of oSQETH).

But as I mentioned before, users can deposit their NFT LP from Uniswap as collateral to mint more oSQETH. So, how much will they worth?

• There are 9 of those LP positions deposited in contract worth 439 ETH + 4183 oSQETH.

I'm having doubt to add crab vault 888 ETH since it doesn't directly relate to oSQETH product and has different contract.

So, Total of 4559 ETH (Worth more than 4.6 Million dollars) and 4183 oSQETH (Worth 76 thousand dollars) is locked in Opyn Squeth contract.

Appendix

Want to know more about Opyn?

• Check their medium
• Join their discord
• Follow Their Twitter
• And finally go check their beautiful APP