Vitalik: Building Index Tracking Assets Based on Options Rather Than Debt Is Worth Considering and Trying

Odaily reported that Vitalik posted on X platform, stating that building index tracking assets based on options rather than debt is worth considering and trying, using options as the foundation of DeFi instead of CDPs and liquidation mechanisms. This design can avoid severe and systemic liquidation effects caused by extreme price volatility, allowing exposure to the index to deviate from the desired exposure in a smoother, quadratic manner. Its key advantage is that it does not require an instant oracle; it can operate based on a slow oracle, i.e., the type of oracle used by prediction markets. The obvious drawback of this design is the need for periodic rebalancing, and it remains unclear whether rebalancing can and how it can be sufficiently resistant to slippage.

Vitalik added that, compared to relying on oracle mechanisms that must provide real-time answers and can be induced to give incorrect real-time answers within a timeframe without human remediation, he believes it is safer to hold algorithmic stablecoins placed within such mechanisms.