What are KPI Options?

Key Performance Indicator (KPI) Options are expiring synthetic tokens that are worth varying amounts of backing collateral dependent on the value of an arbitrary metric at a pre-defined expiry date. Projects can handpick the metric (KPI) they wish to eventually determine the option redemption value, and then use these ERC20 tokens to create a better form of incentives or payments within their ecosystem.


KPI options are expiring synthetic tokens. A synthetic token is a simply a tokenized derivative, or a token that's redemption value is "derived" from a separate underlying metric. Most synthetic tokens derive their value from metrics such as the price of stocks or the value of commodities. KPI options instead derive their redemption value at expiry from the performance of target KPIs for DeFi protocols.

As a simple example, a project that wishes to increase the TVL of their protocol could lock some amount of project tokens and mint TVL KPI options that expire in six months. They could then issue these tokens to large DeFi users. In six months, those DeFi users would be able to redeem their KPI options for a linearly increasing amount of the project's token dependent on how much the project's TVL increased.

This structure is intended to directly incentivize holders of KPI options to participate in improving the selected KPI, since the value of their KPI option based payment/airdrop/liquidity mining rewards is dependent on the success of that KPI.

KPI Data Sources

To price KPI options at expiry an oracle is needed. In this case, UMA's optimistic oracle is used to bring the value of the selected KPI on-chain.

Defining secure and accurate oracle measurement methodologies for arbitrary protocol metrics is a complex and arduous task, and thus KPI options can only be used with pre-approved canonical data sources and request methodologies.

Today, you can create KPI options based on:

  • Any protocol TVL metric available on DefiLlama

  • Any on-chain metric available through the Graph

Using these pre-approved sources allows developers to be confident that their KPI will be returned correctly by UMA's optimistic oracle, and also means that devs should be able to create new KPI options in as little as 30 minutes.

Next Steps

To read more about KPI options, please refer to:

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