Options trading for fractionalized NFTs using a peer-to-pool AMM Model.

🖌️ UI/UX Design: https://www.figma.com/file/3LVfwAKZuh5fqvdXdAwuxS/BlueBirdSwap

🖥️ Backend + Subgraph: https://github.com/Web3Rizzards/bluebirdswap

🖥️ Frontend: https://github.com/Web3Rizzards/new-frontend

💡 Live Site: https://bluebirdswap.vercel.app

Motivation

Our motivation for creating Bluebird Swap is to provide investors with a new asset class that combines the benefits of non-fungible tokens (NFTs) with the flexibility of options trading. NFTs are unique digital assets that have gained popularity in recent years due to their ability to represent ownership and provenance of digital content. However, the high cost of some NFTs may make them inaccessible to many investors.

Fractionalization of NFTs can help address this issue by allowing investors to purchase a fraction of an NFT. This allows investors to gain exposure to high-value NFTs without having to pay the full price. Fractionalization can also increase liquidity in the NFT market, making it easier for investors to buy and sell NFTs.

Options trading can further enhance the flexibility and potential returns for investors in fractionalized NFTs. Options contracts provide the holder with the right, but not the obligation, to buy or sell an underlying asset at a predetermined price (the strike price) at or before a specific date (the expiration date). This means investors can use options to hedge against price fluctuations or generate additional income from their fractionalized NFT holdings.

In summary, a product for options trading of fractionalized NFTs can provide investors with a new asset class that combines the benefits of NFTs and options trading. This can increase accessibility to high-value NFTs, increase liquidity in the NFT market, and provide investors with more flexibility in managing their investments.

User Flows

Pre-login

• User sees Product Logo + Login Button

Login

• User logs in
• User sees interface
• User sees balance of BLUEBIRD $BB and ETH/MATIC
• Fade into main screen

Fractionalize NFT

• User logs in to the NFT fractionalization platform.
• User navigates to the "Fractionalize NFT" section of the platform.
• User selects an NFT from a dropdown collection that they own
• User selects the NFT they want to fractionalize
• User clicks the "Fractionalize" button.
• Platform creates a new ERC20 token for the shards and mints the total supply of shards corresponding to the NFT.
• Platform deposits the NFT into a secure smart contract and locks it until the shards are fully redeemed.
• Platform sends the newly created ERC20 tokens to the user's wallet and updates the user's NFT and ERC20 token balances on the platform dashboard.
• User can now trade their fractionalized NFT shards on the platform

Selecting Collection to trade options

• User logs in to the options trading platform.
• User navigates to the "Trade" section of the platform.
• Platform displays a list of available NFT collections, including the name of the collection, volume of options, and a status bar of puts vs pulls, and the stage of the option (Maker, Taker, Exercise)
• User selects the NFT collection they want to trade options on.

Trading

• Platform displays a list of available options contracts for the selected NFT collection, including the expiration date, strike price, and premium.

• Strike prices available would be (-30%, -20%, -10%, +10%, +20%, +30%) from at the money when the option starts retrieved from chainlink.

• Platform shows the historical floor price of the collection from chainlink.

• User selects the options contract they want to trade and clicks the "Buy" button.

• Platform prompts the user to input the number of options contracts they want to purchase and shows the premium of buying those contracts

• User inputs the quantity of contracts to buy

• User places an order and signs a metamask transaction.

Post Swap (Claiming)

• If user wins, they should be able to see the tweets that they won
• On the tweet, there should be a claim button for the user to collect their prize
• User clicks on the claim button
• User signs metamask
• User sees updated balance

Analytics

• User should be able to see the total amount bet
• User should see P/L
• User should be able to see the amount long / short on a particular tweet

Premium Calculation

An option premium is the price of an option contract. It is thus the income received by the seller (writer) of an option contract.

Options are priced based on the Black-Scholes formula:

$$C(S_t, t) = S_tN(d_1) - Ke^{-r(T-t)}N(d_2)$$

where:

• $C(S_t, t)$ is the price of a call option at time $t$ with strike price $K$ and expiry $T$ on an underlying asset with current price $S_t$.

• $r$ is the risk-free interest rate

• $N$ is the cumulative distribution function of the standard normal distribution $d_1 = \frac{\ln(S_t/K) + (r + \frac{\sigma^2}{2})(T-t)}{\sigma \sqrt{T-t}}$ $d_2 = d_1 - \sigma \sqrt{T-t}$

Here, $\sigma$ is the volatility of the underlying asset.

TODOs

• Setup new GitHub organization
• Create Monorepo
• frontend
• subgraph
• blockchain
• Create new private key for hackathon.
• Fund Account with testnet ETH/Matic
• Create Infura account and get API Key
• Create Figma

BudilBox Submission

Link To Work (Github repo, Google Drive Dropbox etc):

https://github.com/Web3Rizzards/bluebirdswap

Demo URL

// TODO

Video URL

// TODO

Project Name

BluebirdSwap

Project Short Bio

Options trading for fractionalized NFTs using a peer-to-pool AMM Model.

Project Long Description

Project logo

BluebirdSwap Fractionalised NFT Decentralised Options Trading - Solidity API Docs

Deployments

Goerli Testnet

Name	Description	Addresses
BluebirdManager	Manage the creation of option smart contracts	0xcd32229b3D60990C75597009D8398367bCd77D8E
BluebirdGrinder	Fractionalize NFT and Reconstruct NFT from fragments	0x503F5104361D4e0be9874D90d24Fdfd3c88e248F
BluebirdOptions - Azuki	Contract that holds the logic for peer-to-pool automated options writing for a single NFT collection.	0x6e42ed27C4470aD83250Fb6947F4AfBCd6bac98e
BluebirdOptions - BBYC	Contract that holds the logic for peer-to-pool automated options writing for a single NFT collection.	0x98aa30Ce2f37B230A065B5b1E39cF447122F675c
OptionPricing	Contract that holds the logic to price options with BlackScholes	0x31dd4FD29b4e2DeeE184E2F05a179c922804A261
MockOracle	Mock Chainlink oracle in place of any NFT price feeds that are not available on that specific chain	0x3b2B8eD017Df41113E592fff03ab7F7Ca98d118F
Azuki	Mock Azuki contract, used in conjunction with actual Chainlink price feed oracle	0xE88Fc6063B09D822b12Fcab33f77e5ab6336E1c0
BBYC	Blue Bird Yacht Club contract, used as our sample NFT in this protocol	0xd12C158F9CFf1a252B463F2c419Dca1f92872356
bbBBYC	Fractionalised BBYC nft tokens	0x2e02E42872550329ec835c99a00ad9903d72a1DC
bbAzuki	Fractionalised Azuki nft tokens	0x525bb6caFeD1b97A654b250bb0a962578A8d2cf6

Base Testnet

Name	Description	Addresses
BluebirdManager	Manage the creation of option smart contracts	0xA960261A0926F02822543561f3ae0f86839b2Ea2
BluebirdGrinder	Fractionalize NFT and Reconstruct NFT from fragments	0x4aB59d8D18298261560aFcAf780E17Dc69B877d0
BluebirdOptions - BBYC	Contract that holds the logic for peer-to-pool automated options writing for a single NFT collection.	0xC9885Bfbc06a723d9C0627a4140B27810C1C62AB
OptionPricing	Contract that holds the logic to price options with BlackScholes	0xc2a33a404e1fd76eddbF841A9327CD0e1BB4353e
MockOracle	Mock Chainlink oracle in place of any NFT price feeds that are not available on that specific chain	0xfA3422b99515d78D889C0a8Ce866A8444A589fB8
BBYC	Blue Bird Yacht Club contract, used as our sample NFT in this protocol	0x07A583000b1C86b159e065D16c05fbD5A14f92A8
bbBBYC	Fractionalised BBYC nft tokens	0x52E25E5911b2003d4cfe572f374e20d8FF313F5E

Mumbai Testnet

Name	Description	Addresses
BluebirdManager	Manage the creation of option smart contracts	0xbF0f6C964656D9493B831E72606E4b192AE82cA2
BluebirdGrinder	Fractionalize NFT and Reconstruct NFT from fragments	0x7A5A68f723000b6F99863464d1C3483a4A1A549c
BluebirdOptions - BBYC	Contract that holds the logic for peer-to-pool automated options writing for a single NFT collection.	0x547b6c1A306f341CBc46766f73D5523dA8E476F5
OptionPricing	Contract that holds the logic to price options with BlackScholes	0xd79EEB728Fe4Fb7229Fa30D0e15A5C91a1D63C63
MockOracle	Mock Chainlink oracle in place of any NFT price feeds that are not available on that specific chain	0x3F7f1ACDe99F262A9200D220Bb1839bDAbDaA8a3
BBYC	Blue Bird Yacht Club contract, used as our sample NFT in this protocol	0x77f359C9e1F5a1264B931fca77523d99a7807b50
bbBBYC	Fractionalised BBYC nft tokens	0x7321aE89644aBD8b69e68479E5b59ada5FccDc80

Mantle Testnet

Name	Description	Addresses
BluebirdManager	Manage the creation of option smart contracts	0xA960261A0926F02822543561f3ae0f86839b2Ea2
BluebirdGrinder	Fractionalize NFT and Reconstruct NFT from fragments	0x4aB59d8D18298261560aFcAf780E17Dc69B877d0
BluebirdOptions - BBYC	Contract that holds the logic for peer-to-pool automated options writing for a single NFT collection.	0xC9885Bfbc06a723d9C0627a4140B27810C1C62AB
OptionPricing	Contract that holds the logic to price options with BlackScholes	0xc2a33a404e1fd76eddbF841A9327CD0e1BB4353e
MockOracle	Mock Chainlink oracle in place of any NFT price feeds that are not available on that specific chain	0xfA3422b99515d78D889C0a8Ce866A8444A589fB8
BBYC	Blue Bird Yacht Club contract, used as our sample NFT in this protocol	0x07A583000b1C86b159e065D16c05fbD5A14f92A8
bbBBYC	Fractionalised BBYC nft tokens	0x52E25E5911b2003d4cfe572f374e20d8FF313F5E

Metis Testnet

Name	Description	Addresses
BluebirdManager	Manage the creation of option smart contracts	0x9c84b49574DBBe735B1ade34DBdA06C8e055eb36
BluebirdGrinder	Fractionalize NFT and Reconstruct NFT from fragments	0xeBCbEe60876e4481DcFBAE8A2983ebBc49AD624c
BluebirdOptions - BBYC	Contract that holds the logic for peer-to-pool automated options writing for a single NFT collection.	0xd73df9049DE5e04a1Bb03893e0ee266f0544bf66
OptionPricing	Contract that holds the logic to price options with BlackScholes	0x1588996B29513f00C63c979A1b28b1454B1639F6
MockOracle	Mock Chainlink oracle in place of any NFT price feeds that are not available on that specific chain	0x3ca839f1E7E456464e2CEF5bd43E4e64aBFcFBff
BBYC	Blue Bird Yacht Club contract, used as our sample NFT in this protocol	0xA960261A0926F02822543561f3ae0f86839b2Ea2
bbBBYC	Fractionalised BBYC nft tokens	0x92aB41E00310077603254D0D7b4B0BD9Ef60C996

Scroll Alpha Testnet

Name	Description	Addresses
BluebirdManager	Manage the creation of option smart contracts	0xB7FC58dA365D6E328362B5799ec8E9a7Ae13cA07
BluebirdGrinder	Fractionalize NFT and Reconstruct NFT from fragments	0x05CE628bFfB7be936bB659274210AFeefd454Dff
BluebirdOptions - BBYC	Contract that holds the logic for peer-to-pool automated options writing for a single NFT collection.	0x45947030980cE2594b766F138F3D0174f0265cB9
OptionPricing	Contract that holds the logic to price options with BlackScholes	0xe41A822fA1F2Cb9823bd4654830CE8c59754537f
MockOracle	Mock Chainlink oracle in place of any NFT price feeds that are not available on that specific chain	0x7A5A68f723000b6F99863464d1C3483a4A1A549c
BBYC	Blue Bird Yacht Club contract, used as our sample NFT in this protocol	0xd79EEB728Fe4Fb7229Fa30D0e15A5C91a1D63C63
bbBBYC	Fractionalised BBYC nft tokens	0x3A29F2D351D56d5717dbc77fFca6749ee4A17Bbb

BB20

Only can be issued by the BluebirdGrinder

grinder

address grinder

Address of the BluebirdGrinder contract

onlyGrinder

modifier onlyGrinder()

Modifier to check if is called by the BluebirdGrinder

constructor

constructor(string _name, string _symbol, address _grinder) public

Constructor of the BB20 contract

Parameters

Name	Type	Description
_name	string	Name of the token
_symbol	string	Symbol of the token
_grinder	address	Address of the BluebirdGrinder contract

mint

function mint(address _receipient, uint256 _amount) external

Mint BB20 Tokens

Only can be called by the BluebirdGrinder

Parameters

Name	Type	Description
_receipient	address	Address of the receipient
_amount	uint256	Amount of tokens to mint

burn

function burn(uint256 amount) external returns (bool)

Burn amount tokens and decreasing the total supply.

Only can be called by the BluebirdGrinder

Parameters

Name	Type	Description
amount	uint256	Amount of tokens to burn

_isFactory

function _isFactory() internal view

Used in modifier to check if is called by the BluebirdGrinder

BluebirdGrinder

FRACTIONALISED_AMOUNT

uint256 FRACTIONALISED_AMOUNT

Amount of BB20 tokens to mint per NFT

1 NFT = 1 million BB20 tokens

collectionToTokenIds

mapping(address => struct EnumerableSet.UintSet) collectionToTokenIds

Mapping of collection address to enumerable token Ids

nftAddressToTokenAddress

mapping(address => contract BB20) nftAddressToTokenAddress

Mapping of NFT collection address to BB20 token address

whitelisted

mapping(address => bool) whitelisted

Mapping of collection address to boolean to check if collection is whitelisted

constructor

constructor() public

fractionalizeNFT

function fractionalizeNFT(address _collectionAddress, uint256 _tokenId) external

Function to fractionalize NFTs into BB20 tokens

Parameters

Name	Type	Description
_collectionAddress	address	Address of NFT collection
_tokenId	uint256	Token Id of NFT to fractionalize

reconstructNFT

function reconstructNFT(address _collectionAddress, uint256 _tokenId) external

Function to reconstruct NFTs from BB20 tokens

Parameters

Name	Type	Description
_collectionAddress	address	Address of NFT collection
_tokenId	uint256	Token Id of NFT to reconstruct

whitelistNFT

function whitelistNFT(address _collectionAddress) external

Function to whitelist NFT collection

Parameters

Name	Type	Description
_collectionAddress	address	Address of NFT collection

getTokenFromCollection

function getTokenFromCollection(address _collectionAddress) external view returns (contract IBB20)

Function to get token address from collection address

Parameters

Name	Type	Description
_collectionAddress	address	Address of NFT collection

getIds

function getIds(address _collectionAddress) external view returns (uint256[])

Function to get all token ids from collection address that are in the contract

Parameters

Name	Type	Description
_collectionAddress	address	Address of NFT collection

concatenate

function concatenate(string _a, string _b) internal pure returns (string)

Returns a concatenated string of a and b

Parameters

Name	Type	Description
_a	string	string a
_b	string	string b

BluebirdManager

optArray

struct EnumerableSet.AddressSet optArray

Array of all options contract addresses

optionPricing

contract IOptionPricing optionPricing

Option Pricing Contract

grinder

contract IBluebirdGrinder grinder

Bluebird Grinder Contract

optionExists

mapping(address => bool) optionExists

Mapping of NFT token address to boolean to check if options have been created

constructor

constructor(contract IOptionPricing _optionPricing, contract IBluebirdGrinder _grinder) public

Constructor for Bluebird Manager

Parameters

Name	Type	Description
_optionPricing	contract IOptionPricing	Option Pricing Contract
_grinder	contract IBluebirdGrinder	Bluebird Grinder Contract

onlyOptions

modifier onlyOptions()

Modifier to check if msg.sender is an Options Contract

createOptions

function createOptions(address _collectionAddress, address _nftFeedAddress) public

Create a Put and Call Options for a specified collection for the current epoch

Parameters

Name	Type	Description
_collectionAddress	address	Collection Address
_nftFeedAddress	address	Chainlink Feed Address

getOptArray

function getOptArray() external view returns (address[])

Function to retrieve options array

emitCallOptionCreatedEvent

function emitCallOptionCreatedEvent(address _contractAddress, uint256 _optionId, uint256 _epoch, address _nftToken, uint256 _strikePrice, uint256 _start, uint256 _expiry) external

Proxy function to emit event from options contract

Parameters

Name	Type	Description
_contractAddress	address	Address of options contract
_optionId	uint256	Option ID
_epoch	uint256	Epoch
_nftToken	address	NFT Token Address
_strikePrice	uint256	Strike Price
_start	uint256	Start Time
_expiry	uint256	Expiry Time

emitPutOptionCreatedEvent

function emitPutOptionCreatedEvent(address _contractAddress, uint256 _optionId, uint256 _epoch, address _nftToken, uint256 _strikePrice, uint256 _start, uint256 _expiry) external

Proxy function to emit event from options contract

Parameters

Name	Type	Description
_contractAddress	address	Address of options contract
_optionId	uint256	Option ID
_epoch	uint256	Epoch
_nftToken	address	NFT Token Address
_strikePrice	uint256	Strike Price
_start	uint256	Start Time
_expiry	uint256	Expiry Time

emitBoughtEvent

function emitBoughtEvent(address _contractAddress, address _user, uint256 _order, uint256 _amount, uint256 _premium, uint256 _timestamp, uint256 _epoch) external

Proxy function to emit event from options contract

Parameters

Name	Type	Description
_contractAddress	address	Address of options contract
_user	address	User Address
_order	uint256	Order ID
_amount	uint256	Amount
_premium	uint256	Premium
_timestamp	uint256	Timestamp
_epoch	uint256	Epoch

emitExerciseEvent

function emitExerciseEvent(address _contractAddress, address _user, uint256 _id, uint256 _pnl, bool _profit) external

Proxy function to emit event from options contract

Parameters

Name	Type	Description
_contractAddress	address	Address of options contract
_user	address	User Address
_id	uint256	Order ID
_pnl	uint256	PnL
_profit	bool	Profit

BluebirdOptions

Only can be issued by the BluebirdManager

nftFeed

contract AggregatorV3Interface nftFeed

Price feed interface used for getting the latest price

nftToken

contract IERC20 nftToken

Fractionalised NFT Token

bluebirdManager

contract IBluebirdManager bluebirdManager

Bluebird Manager contract

optionPricing

contract IOptionPricing optionPricing

Option pricing contract

EXPIRY

uint256 EXPIRY

Expiry time of options in seconds

startTimeEpoch

uint256 startTimeEpoch

Start time of epoch in seconds

interval

uint256 interval

Interval of chainlink round update

epoch

uint256 epoch

Current epoch number

liquidityProvidingTime

uint256 liquidityProvidingTime

Amount of time in which market makers can provide liquidity

currentId

uint256 currentId

Current Id of options

maxBuyCall

uint256 maxBuyCall

Maximum amount of options that a user can buy for calls

maxBuyPut

uint256 maxBuyPut

Maximum amount of options that a user can buy for puts

userDeposits

mapping(address => mapping(uint256 => uint256)) userDeposits

Mapping of user to amount of NFT tokens or ETH deposited to providing liquidity

nftOpts

mapping(uint256 => struct IBluebirdOptions.Option) nftOpts

Mapping to track each option

userToOptionIdToAmount

mapping(address => mapping(uint256 => uint256)) userToOptionIdToAmount

Mapping of user to option id to amount of options bought

exercised

mapping(address => mapping(uint256 => bool)) exercised

Mapping which checks if current id has been exercised

epochToStrikePrices

mapping(uint256 => mapping(bool => uint256[])) epochToStrikePrices

Mapping of epoch to isPut to strike prices

constructor

constructor(contract AggregatorV3Interface _nftFeed, contract IBB20 _nftToken, address _bluebirdManager, contract IOptionPricing _optionsPricing, address _owner) public

Constructor of Bluebird Options

Parameters

Name	Type	Description
_nftFeed	contract AggregatorV3Interface	Price feed of NFT
_nftToken	contract IBB20	Fractionalised NFT Token
_bluebirdManager	address	Bluebird Manager contract
_optionsPricing	contract IOptionPricing	Option pricing contract
_owner	address	Owner of contract

setLiquidityProvidingTime

function setLiquidityProvidingTime(uint256 _liquidityProvidingTime) external

Set liquidity providing time

Parameters

Name	Type	Description
_liquidityProvidingTime	uint256	Time to provide liquidity

setExpiry

function setExpiry(uint256 _expiry) external

Set expiry

Parameters

Name	Type	Description
_expiry	uint256	Expiry of options

setInterval

function setInterval(uint256 _interval) external

Set interval

Parameters

Name	Type	Description
_interval	uint256	interval of chainlink round update

_calculateStrikePrices

function _calculateStrikePrices(uint256 _floorPrice, bool _isPut) internal pure returns (uint256[])

Function to calculate strike prices

Parameters

Name	Type	Description
_floorPrice	uint256	Floor price of NFT
_isPut	bool	Whether option is put or call

startEpoch

function startEpoch() public

Function to start epoch

writeOption

function writeOption() public

Writes options

Only owner/controller should be able to trigger this

getPremium

function getPremium(uint256 _id) public view returns (uint256)

Get premium of an option

Parameters

Name	Type	Description
_id	uint256	Id of contract

getNftPrice

function getNftPrice() public view returns (uint256)

Returns the price of NFT from oracle

Return Values

Name	Type	Description
[0]	uint256	Price of NFT

getStage

function getStage() public view returns (uint256 _stage)

Get current stage of contract

Return Values

Name	Type	Description
_stage	uint256	Stage of contract

getHistoricalPrices

function getHistoricalPrices() public view returns (uint256[])

Returns the historical prices of NFT

Return Values

Name	Type	Description
[0]	uint256[]	Historical prices of NFT

getStrikes

function getStrikes(uint256 _epoch, bool _isPut) external view returns (uint256[])

Returns the strike prices of an epoch

Return Values

Name	Type	Description
[0]	uint256[]	uint256[] memory Array of strike prices

depositNftToken

function depositNftToken(uint256 amount) public

Provide liquidity by depositing NFT tokens

Parameters

Name	Type	Description
amount	uint256	Amount of NFT tokens to deposit

depositETH

function depositETH() public payable

Provide liquidity by depositing ETH

buy

function buy(uint256 _id, uint256 _amount) external

Buy an option based on _id

Parameters

Name	Type	Description
_id	uint256	Index of the option
_amount	uint256	Amount of options to buy

calculateAmountETH

function calculateAmountETH(uint256 _id) public view returns (uint256)

Calculate amount of ETH to be received when exercising an option, for calls only

Parameters

Name	Type	Description
_id	uint256	Index of the option

Return Values

Name	Type	Description
[0]	uint256	Amount of ETH to be received

exercise

function exercise(uint256 _id) external payable

Exercise an option based on _id

Parameters

Name	Type	Description
_id	uint256	Id of option to exercise

IBB20

Only can be issued by the BluebirdGrinder

Minted

event Minted(address to, uint256 amount)

mint

function mint(address _receipient, uint256 _amount) external

Mint BB20 Tokens

burn

function burn(uint256 amount) external returns (bool)

Burn amount tokens and decreasing the total supply.

Parameters

Name	Type	Description
amount	uint256	Amount of tokens to burn