Hook's Request-for-Quotes System (RFQ)
Hook’s Request-for-Quotes System (RFQ) is the best way for market makers to trade Hook’s covered call options. Instead of having to manually update offers as the price of an option changes, market makers can use Hook’s RFQ to passively respond to requests in real-time.
How Hook’s RFQ Works
Market makers can use Hook’s RFQ to provide quotes on Hook’s supported collections. Market makers can provide multiple quotes at a time when a request is received. Hook’s RFQ supports both buy/sell orders for single or batch options orders. Unlike other RFQ systems, there is no “last look” available to responders, so Hook recommends that market makers submit short-dated orders, so they’re not subject to undue price risk.
Note: the bids referred to here are wETH-based, fixed-priced bids, not vBids.
Here’s how RFQ works for bids on unminted call options:
- An NFT holder navigates to Hook’s ‘Portfolio’ tab to check the highest offer available on one of their NFTs.
- Hook sends all eligible market makers a request for quotes for the NFT collection.
- The market makers respond with their signed quotes.
- Hook displays the highest quote for each strike price and expiration on the frontend.
- The option writer accepts the quote and pays the transaction fee to mint the option.
How Market Makers benefit from Hook’s RFQ
Known Counterparties
Market makers can create bids that can only be accepted by a specific counterparty or that meet a certain set of conditions. If a request comes from a wallet they believe might have an information advantage, they can ignore it.
Capital Efficient
RFQ eliminates the need for idle capital to be deposited in the protocol. Market makers can deploy capital in other strategies until their offers are accepted.
Gasless
Market makers can place gasless offers on call options. When the order is filled, the option writer will pay the transaction fee.
How Hook’s RFQ can benefit Users
Improved Prices
RFQ allows more market makers to participate in Hook’s options markets. Increased competition nudges market makers to offer their best pricing, so their trades will be filled.
Deeper Liquidity
RFQ reduces a market maker’s risk when providing liquidity to the protocol. This allows them to provide larger amounts of liquidity. More liquidity allows users to execute larger orders with less slippage.
No UX Change
NFT holders accept offers in the same way. Better prices and deeper liquidity without the learning curve.
How to start using Hook’s RFQ
Those interested in getting access to Hook’s RFQ can fill out this form or send an email to austin@hook.xyz.
