What Are the Challenges in Programming Complex Exotic Options into Smart Contracts?

Programming exotic options into smart contracts presents several challenges. The complex payoff structures and path-dependent features of exotic options are difficult to codify and may require a large amount of computational resources, leading to high gas fees.

Sourcing reliable and frequent data for these complex triggers from oracles can also be a significant hurdle. Furthermore, the inflexibility of immutable smart contracts makes it hard to amend the terms of the option if needed, and the risk of bugs in the complex code could lead to substantial financial losses.