Smile

Demo

About

Smile is a non-custodial marketplace for fixed-expiry, cash-settled European options on ETH — and, on Circle's Arc chain, on any USDC-quoted pair. Every option sold is backed by collateral a liquidity provider (LP) has committed through 1inch Aqua, a shared-liquidity layer where a maker's tokens stay in the maker's own wallet until a trade actually needs them: collateral is pulled just-in-time at fill, never parked in advance. Pricing runs inside 1inch SwapVM, a small on-chain virtual machine that executes a maker's strategy as a program of opcodes; Smile adds one custom opcode that prices an option from its strike, tenor and volatility. For the EthOnline 2026 Continuation Track, Smile adds three capital-efficient sibling vaults so LPs can make markets for options sellers without locking the full notional: • SpreadVault — defined-risk credit spreads. A short put is hedged by a long put, so the vault escrows only the spread's true worst-case loss (the strike width) instead of the whole strike. The same holds for call spreads and iron condors: because European options settle at one price, only one side can finish in-the-money, so the escrow is the larger wing, not the sum. • MarginVault — partially-collateralized (naked) puts: sell a put on ETH without posting a full ETH of collateral. A six-stage margin-and-liquidation process — open, buy, under-margin on a price crash, a one-hour grace window then auction, a waterfall (writer's margin → auction bidder → backstop pool → insurance fund), then cash settlement at expiry — stands behind every position and is traceable end-to-end with ./script/margin-lifecycle.sh. These are Arc's programmable-money flows made concrete. • RfqVault — request-for-quote fills agains t LP-signed EIP-712 quotes, for sizes and strikes off the standard grid. The Graph indexes the vault's liquidity ranges and fills, replacing the brute-force RPC scan that went blind past 50 authorizations. The Subgraph MCP feeds an AI copilot live liquidity, open interest and trade opportunities which — alongside news, social and quant MCPs plus packaged trader skills regarding smile and their portfolio — give traders an edge. Circle Arc makes the whole book stablecoin-native: because Arc settles in USDC, both calls and puts are collateralized in USDC, rather than calls in ETH and puts in USDC. The margin-vault treasury runs with no private key in the repository — Circle Gateway bridges USDC from any chain to top up the insurance fund, and a Circle developer-controlled wallet, signed through Circle's API, funds the backstop pool. Every top-up lands as an on-chain receipt shown in the app.

How it's made

please note the continuation submission is not on main branch, but EthOnline2026_continuation_track. Technologies. Solidity contracts (Foundry, via_ir) on the official 1inch Aqua + SwapVM, vendored and unmodified; a Next.js 16 frontend with Wagmi/Viem, recharts and a TradingView price chart; The Graph for indexing; and an AI copilot on the Vercel AI SDK (Anthropic/OpenAI/Google/OpenRouter). Expiry settlement reads Chainlink. How it's pieced together. An LP authorizes a price range and ships it to a vault; the vault is an Aqua app, so at buy time Aqua pulls the LP's collateral just-in-time and SwapVM prices the premium on-chain via a custom opcode. Fills emit events that The Graph indexes; the frontend and the copilot read that index instead of scanning the chain. On Circle Arc the same stack settles in native USDC. What the partners bought us. 1inch Aqua — collateral stays in LP wallets and is pulled at fill, so we added three capital-efficient vaults (defined-risk spreads, partially-margined puts with a liquidation waterfall, RFQ against LP-signed quotes) as sibling Aqua apps without touching the audited main vault. The Graph — its index replaced a brute-force RPC scan that went blind past 50 authorizations, and via the Subgraph MCP it became a live data source the copilot reasons over. Circle Arc + Gateway — Arc settles in USDC, so calls and puts are both USDC-collateralized; Gateway and a developer-controlled wallet top up the margin tier's safety funds, so the treasury runs with no private key in the repo. Hackiest part. Not the contracts but the last-mile UI — keeping an options frontend honest about the async, just-in-time chain state it doesn't directly own (write-before-read races, and stale ranges that had to be gated so they couldn't look actionable).