Building index-tracking assets on top of options instead of debt

The article proposes building index-tracking synthetic assets on options instead of debt, arguing this removes the need for real-time oracles and liquidations. It defines a pair of tokens, P and N, created by splitting 1 ETH, where at maturity P receives min(1, S/x) ETH and N receives max(0, 1 - S/x) ETH, with x being the oracle's value of the tracked ticker T. Because P + N always equals 1 ETH, the system cannot become insolvent and liquidations are unnecessary. The author suggests holding deep in-the-money options and rotating to lower strikes as prices approach the strike, and says accepting moderate quadratic drift of about 1-4% per year is underrated.