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What Are the Challenges of Using an NFT to Represent an American-Style Option Contract On-Chain?

The "exercise at any time" feature of American options requires complex, gas-intensive, continuous on-chain monitoring.
Greeks.Live16.11.25

What Are the Challenges of Using an NFT to Represent an American-Style Option Contract On-Chain?

American-style options can be exercised at any time before expiration, which complicates the smart contract logic for an NFT. The contract must constantly monitor the underlying asset's price and the collateral status to allow for early exercise, unlike European options which only settle at expiry.

This continuous monitoring and complex state management add to the contract's gas cost and complexity.

What Is the Difference between Gas Limit and Gas Price?
How Do Decentralized Finance (DeFi) Options Protocols Handle the Early Exercise Feature?
Why Might an American Option Have a Higher Premium than a Comparable European Option?
What Is a Key Smart Contract Risk When Implementing a New MEV-resistant Feature?

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