Rhonin

How it works

The Rhonin allows users to benefit from high-yield staking using stable coins. The protocol uses deposited funds as a collateral for borrowing staked assets, while the currency risk is managed using a rho-neutral compositon of token options.

A rho neutral portfolio is a portfolio of options and underlying assets that is designed to be insensitive to changes in interest rates. Like a delta neutral portfolio, a rho neutral portfolio seeks to offset the positive rho of one component with the negative rho of another component, such that the overall rho of the portfolio is zero.

To create a rho neutral portfolio, protocol keepers can use options with different rhos, such as both call and put options, to offset each other's sensitivity to changes in interest rates. For example, if a keeper holds a call option with a rho of 0.1 and a put option with a rho of -0.1, the overall rho of the portfolio will be zero. The keeper can then adjust the number of options held or the strike prices of the options to maintain a rho neutral position.