FAQs - Opium Network

What is the Opium Protocol?
Opium is a protocol on Ethereum that facilitates trustless contracts between parties through smart escrow. With the help of Opium, users can schedule transactions, make wagers, create different primitives similar to the ones existing on traditional markets and more. Because of its simplicity and composability protocol can be applied to solve a wide range of problems: from peer-to-peer bets up to financial derivatives.
Why does Opium matter?
Smart escrow can solve many problems of the financial world. It enables creating any complex financial contracts similar to CeFi derivatives, risk tranching, using different collaterals. All operations are fast and easy to execute at a fraction of previously associated costs, don’t require a centralized intermediary and can be set with great flexibility, which makes it possible for anyone to create new, previously unfeasible markets.
What makes Opium different?
Thanks to the simplicity of its logic, the Opium protocol is highly flexible and versatile. It may support (thanks to optimistic oracles and term structure) any underlying — there are Opium-powered projects that use olive oil and fine art as the underlying — and any type of decentralized financial instruments for hedging or speculation. One doesn’t need any technical knowledge to create a smart escrow, the Opium Protocol enables users to make various products and recipes just by adding and removing parameters. Moreover, its simplicity helps Opium be composable with other DeFi protocols. 
Opium can be seen as a proxy for real-world problems, as traditional derivatives are somewhat hard to understand and use, while high fees and long transaction times make the creation of financial markets for some collateral unfeasible. It is essential to understand that even if creating a decentralized derivative contract or a new market is easy from the technical point of view, it requires knowledge of financial tools and an understanding of DeFi. Opium is a solution for DeFi experts and professional developers, please make sure you understand how it works and never transact with assets you can’t afford to lose.
What does it do?
The Opium protocol is a smart escrow that enables two parties to make a trustless contract and holds an asset on their behalf until contract terms are fully or partially fulfilled.
To enter into a contract, two parties create a safe by setting the desired parameters in a standardized escrow. A safe accepts an asset according to a rule, locks it for the specified period of time and after this period is over releases it according to another rule that depends on an oracle. Oracle communicates to the escrow whether the desired event occurred or not and thus triggers the execution of the transaction.
A very simple example of how an escrow works would be hiring a freelancer to perform some task. Parties agree on parameters, such as scope, deadline and remuneration, and create a safe. A hiring party deposits money. After the deadline, an oracle checks how much work is done. Depending on how much work is completed, the safe will give the freelancer either a percentage or the full sum.
Is the protocol fully developed?
The first version of the protocol is live on Ethereum mainnet and was audited by two companies, SmartDec and MixBytes. Despite all major components being operable, the protocol as a whole is under active development and testing by the community. Thanks to community members’s contribution, Opium constantly improves and adjusts to the new standards. The code is open-source; anyone can contribute to the development of the Opium Protocol on GitHub.
How safe is it to use?
It is important to understand that all blockchain-based protocols and technology itself are new and there is no guarantee of its safety. Most of the protocols and applications are run by people with a deep knowledge of the technology and willingness to “test in prod” their ideas and potentially be exposed to the greater risk.
Who is behind it?
Opium was developed by a founding team and contributiors with expertise in technology, trading and finance. After the successful launch of the protocol, the team stepped back from governance. Currently, the protocol is governed by $OPIUM token holders and supported by members of the community, ecosystem partners and a decentralized team of contributors.
What is liquidity mining? Can anyone participate?
Liquidity mining or yield farming is a process of providing liquidity via cryptocurrencies or tokens to DeFi protocols. In contrast with technical mining, liquidity mining on AMM doesn’t automatically imply a reward. Adding liquidity to a pool may seem an easy job, however, it requires deep knowledge and understanding of different risks associated with it like impermanent loss, risk of liquidity providers and others. So it is sophisticated users with knowledge in the field who maintain the ecosystem. They compete with each other and receive tokens for their expert contribution. Disclaimer: please be sure you understand how LM works, do expect possible losses and never supply funds that you are not ready to lose. Remember that LM is not for regular users and you will compete with professional parties (like with technical mining of Bitcoin, Ethereum...)
What can I do with protocol?
As a user/contributor, you can participate in the projects built on top of the protocol, buying some products or adding liquidity to a pool. Please note that some projects are subject to restricted access. As a developer, you can build your own projects on top of the protocol; for example, one team created a market for decentralized analogues of futures contracts on Olive oil. Alternatively, you may find a vulnerability and participate in the Opium bug bounty program. As a specialist in some field, you can contribute to project development. For example, this documentation is open-source, so if you see a way to improve it, you can make a submission. As a financial engineer, you can build a bot to arbitrage between products and protocols.
Please refer to the Interact with Opium section for more details.
Are there any restrictions and why?
The protocol itself runs on blockchain, thus it is decentralized and owned by the community, which means it is impossible to stop it or restrict its usage in any jurisdiction.
However, the projects built on top of the protocol can have their own terms of service including but not limited to restrictions based on geographical location or jurisdiction, expertise level of users and the amount of risk involved in the product. To learn more about project-specific restrictions, refer to the websites of a corresponding project.
What else do I need to know before doing anything with Opium?
Read the disclaimer, do your own research, understand the risks associated with the technology you are about to use and form your own opinion about it. Check the local regulations to make sure you can use the platform.
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