Firstly, the endogenous quoting mechanism to avoid oracle risk.

The DDH model introduces an independent AMM mechanism to generate stable and reliable spot prices for options automatically, which could effectively reduce the price of options and provide traders with arbitrage and hedging opportunities. Although AMM cannot guarantee risk-free, portfolio asset conservation is possible to achieve. Oracle price feeding is a high-cost choice because the quality of the price data cannot be guaranteed, and more importantly, there are security vulnerabilities to be attacked. Considering that fact, KAKI ruled out the oracle method in favor of AMM. Contrast this with the simplified pricing model used by Hegic, whose implied volatility needs to be updated manually based on information from Skew.com, plus each option charges a 1% fee, shared equally by LPs, so the option price is relatively high. In particular, there is no slippage in option pricing, and it is difficult to maintain a balance between the call and put from the option pool, making it difficult for LPs to hedge risk. The LPs also have to take the bet losses.