We're excited to release a new feature this week, lazy minting, designed to provide more liquidity for option buyers on our marketplace. As a refresher, NFT options on Hook allow option buyers to purchase upside exposure from NFT holders. If the NFT doesn’t moon before the option expires, the holder keeps their NFT, otherwise, the buyer earns part of the upside.
Lazy minting is a new product feature that allows a seller to wait to mint their option until an actual buyer is present. In addition to allowing users to keep NFTs in their wallets, lazy minting enables writers to offer a single underlying NFT at multiple strike prices and expiration combinations.
Capital Efficiency and Options
One of the core challenges of options markets is liquidity fragmentation, which is the risk that there will be buyers and sellers of options on the same asset, but those options will have different terms. Hook already buckets liquidity into fixed strike price and expiration schedules that make it easier to trade options. However, when listing an option for sale, a user needs to pre-select a strike price and expiration before a buyer can purchase it or make an offer. What if the buyer wanted to buy an option on the same underlying NFT but with different terms?
Lazy minting solves this problem by allowing the writer to hold on to their NFT and simultaneously offer it across many different strike prices. This makes bringing liquidity into the market much more capital efficient because liquidity can be available for ~10x the number of option terms with the same amount of capital.
Only major NFT holders and institutional NFT traders can currently provide liquidity to the system. Please open a ticket in our discord if you're interested in participating. Anyone is able to mint these new lazy options.
How to lazy mint options
Lazy mintable options appear in our interface exactly like regular, already-minted options in Hook’s interface. You’ll notice that the same underlying NFT appears multiple times.
After selecting one of these NFTs, an orange border will appear and you’ll be prompted to “Purchase Option”. Unlike already-minted NFTs, you’re only able to purchase the option (not make an offer).
Next, you’ll be prompted to add the relevant approvals and to sign a 0x protocol order. This order allows the lazy minter to sell you any option with a specific strike price and expiration backed by the correct collection.
Finally, after signing the order, you’ll send your order to the minter on-chain.
This infrastructure is core to our plans and upcoming roadmap. In the next few months, we plan on partnering directly with projects to allow lazy minting options on their projects. We also want to let all users interact with this system so they can continuously provide quotes for many different assets automatically as they enter their wallets, basically allowing them to stake their NFTs.