Delphi Podcast Notes: Zeta Markets, an Options and Futures Trading Platform on Solana
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Delphi Podcast Notes: Zeta Markets, an Options and Futures Trading Platform on Solana
DeFi will completely crush TradFi.
Navigating Web3 tides with focused insightsCompiled by: YH
Note: Delphi Digital's podcasts are considered top-tier in the industry, offering deep insights and early exposure to alpha projects. This podcast summary is provided by YH, authorized and translated for publication by TechFlow.
Tristan’s Background
Tristan Frizza is co-founder and CEO of Zeta Markets, a Solana-based DeFi futures and options platform. Tristan’s background:
Entered crypto in 2017 through a friend, then moved into trading;
Studied blockchain technology and built his own POW blockchain;
Worked as a data science/software engineer in tech; felt burnt out during pandemic remote work;
Learned Solidity over Christmas, teamed up with an HFT friend, and began building a DeFi derivatives platform.
Why Move from Ethereum to Solana?
Solidity is very native to blockchain
Easy to learn over a weekend, with strong tooling and support.
Low barrier to entry—no multi-threading or memory management required.
Speed and responsiveness are critical for high-frequency derivatives trading
Ethereum’s high fees, slow block times, and sluggish oracle updates make it unsuitable.
Solana offers theoretical throughput of 50,000 TPS with low gas fees
Had a call with the Solana team and aligned with their vision.
Data processing/distributed systems require parallelization—that’s how you scale to TB-level systems
Why Haven’t DeFi Options Taken Off?
Most Ethereum-based options protocols are single-sided AMMs (e.g., Hegic) or orderbook-based.
What prevents them from becoming platforms like Deribit is lack of liquidity—liquid markets attract more traders (flywheel effect).
Spot markets only need liquidity injected into one market, while liquidity is fragmented across options and spot markets.
Early Ethereum options platforms had small quote sizes on just 1–2 markets and required prohibitively high gas fees.
How Zeta Attracts Liquidity
Many market makers want to hedge Delta using linear products (futures, Perps, or spot)
Zeta pairs each options expiry with an equivalent futures contract expiring on the same date, attracting professional liquidity providers.
Futures are better than spot because they allow leverage and are more capital-efficient.
Futures aren't perfect hedges and are hard to execute dynamically.
The setup is simple—zero-strike options are essentially futures.
Zeta’s Killer Features
Dynamic Pricing and IV Calculation
Detailed methodology available in Zeta’s GitBook
Classic pricing models update volatility manually once per week; not decentralized, slow, and heavily arbitraged
Zeta executes Black-Scholes (the gold standard for options pricing) on-chain.
Input spot price, strike price, time to expiry, and implied volatility.
IV is an internal computation layer updated via Bayesian methods based on trades along the curve (a responsive volatility pricing mechanism).
If heavy trading occurs in a segment of the curve, it triggers recalibration.
Undercollateralization
Everything in DeFi tends toward full or over-collateralization—costly for opening multiple positions
Users maintain collateral in their accounts and use futures-style margining
Similar to FTX—you can lever up until falling below maintenance margin, triggering liquidation
Anyone can liquidate or profit from liquidations, unlike premium-paid-in-advance margin models
Strong liquidity is essential in leveraged markets to ensure timely liquidations
Currently, Zeta maintains healthy buffers in liquidations while moving toward super liquid markets.
An insurance fund has been established to guard against large black swan events.
Settlement Mechanism
Cash-settled European options
Oracle settlement prices are recorded weekly in a dedicated account, providing a reference even if users miss expiry or fail to settle immediately
No manual settlement required
Structured Products
By late 2021, DeFi derivatives and options were unpopular.
Ribbon pioneered structured products and took off, inspiring imitators and differentiated models
Zeta helped Ribbon achieve cross-chain functionality on Solana; currently, Ribbon vaults alone bring over $30M TVL to Zeta.
Genesis reports a $1B market cap valuation for DeFi options vaults.
Structured products offer a good “set-and-forget” strategy
Given user unfamiliarity with order-based options trading, this will likely dominate short- to mid-term product development
Zeta provides the infrastructure; Ribbon/Katana package it into user-friendly products—but all rely on Zeta’s underlying options engine.
Users gain exposure to options and can execute sophisticated strategies.
CeFi vs. DeFi Options
CeFi options perform well—Deribit holds 90–95% market share
Advantages of DeFi options:
Access to mid-tier assets unsupported on platforms like Deribit
Greater scalability in decentralized environments
In TradFi, hedge funds and trading firms build proprietary tools, giving them an edge over retail
In DeFi, protocols are composable and open-source, built on rich information libraries with parallel processing and mutual protocol integration
Potential use cases, such as integration with NFTs and gaming
Advantages of CeFi options:
Speed—CeFi on AWS servers is faster with lower latency than DeFi
DeFi and CeFi derivatives may coexist, serving different markets
Hybrid “CeDeFi” models are emerging, such as dYdX with centralized order books and on-chain settlement.
Options Beyond Speculation
For most people, options serve as a risk mitigation tool
Buying options is like buying insurance—you can exercise if the market turns unfavorable
Selling options is like selling risk—others can exercise or trade against you.
Options are the Swiss Army knife of financial derivatives, with diverse applications:
Native DeFi use case: hedging impermanent loss
Delta hedging for directionally neutral trading
Vesting options—e.g., airdrop call options, DAO-to-DAO agreements, employee stock options
NFT lending
Market maker trading
Building on Solana
Design space on Solidity chains is constrained by gas costs; Solana is far more open.
Serum successfully built an on-chain order book
Attempts were made on Ethereum and other chains, but Solana is the only platform capable of supporting such complex engines.
Zeta is essentially an extension of Serum, building derivatives atop its infrastructure.
Zeta Roadmap
Early 2022: Launched mainnet for Zeta DEX (Serum-based exchange) and Flex (Flex options), supporting Ribbon, Katana, and other DeFi options.
Roll out new features: strategy-based margining, longer-dated options, more underlying assets
Launch additional products: Perps and other cross-margin offerings
Cater to varied use cases, e.g., Ribbon, Katana
Build analytics and metrics to become a source of on-chain data
Will be the sole provider of implied volatility for non-BTC/ETH/SOL options.
The Future of DeFi
“DeFi will completely dismantle TradFi”
DeFi is here to stay—it’s a superior alternative for earning yield, banking, financial products, and cross-border transactions
Blockchains are trustless—exactly what finance should be
More collaboration in DeFi; in TradFi, everyone seeks unique advantages
Barriers remain—lack of understanding; we need more education
User experience needs improvement across DeFi protocols, wallets, and onboarding
I feel we’re in the “dial-up” stage of DeFi—once we reach the “5G” phase in a few years, it will be incredible.
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