We've been looking at a new & exciting options protocol @HegicOptions 👇
1/ What is Hegic?
A protocol for on-chain hedging contracts (= American options).
1st implementation = at-the-money put options on ETH backed by a shared liquidity pool of DAI.
1/ What is Hegic?
A protocol for on-chain hedging contracts (= American options).
1st implementation = at-the-money put options on ETH backed by a shared liquidity pool of DAI.
2/ What’s unique about Hegic?
The DAI deposits by liquidity providers (LPs) are distributed between many hedge contracts = risk diversification, improved liquidity & capital-efficiency.
Assumption: long-term returns for Hegic LPs > returns of a solo options writer.
The DAI deposits by liquidity providers (LPs) are distributed between many hedge contracts = risk diversification, improved liquidity & capital-efficiency.
Assumption: long-term returns for Hegic LPs > returns of a solo options writer.
3/ How does it work for LPs?
LPs deposit DAI into the pool (DAI <> CHAI via Uniswap) and get writeDAI that corresponds to their pro rata share of the total pool.
LP earns = pro rata share of premium fees + DSR.
LPs deposit DAI into the pool (DAI <> CHAI via Uniswap) and get writeDAI that corresponds to their pro rata share of the total pool.
LP earns = pro rata share of premium fees + DSR.
4/ Buyers?
The hedge buyer sets: expiry date (in weeks) and # of ETH. ETH/USD strike price from @chainlink.
Cost: 2% premium (per week) + 1% settlement fee.
Premium fees distributed to LPs & settlement fees to HEGIC tokenholders.
The hedge buyer sets: expiry date (in weeks) and # of ETH. ETH/USD strike price from @chainlink.
Cost: 2% premium (per week) + 1% settlement fee.
Premium fees distributed to LPs & settlement fees to HEGIC tokenholders.
5/ Who is Hegic competing against?
On-chain: Nexus, Opyn → pros: protection for current ETH value & shared liquidity.
Off-chain: Deribit, FTX → pros: transparency & trust-minimization.
On-chain: Nexus, Opyn → pros: protection for current ETH value & shared liquidity.
Off-chain: Deribit, FTX → pros: transparency & trust-minimization.
6/ Product roadmap?
The 1st implementation supports only non-tradable at-the-money ETH/DAI puts.
Future: a decentralized options protocol with the features of a centralized options exchange like @DeribitExchange.
The 1st implementation supports only non-tradable at-the-money ETH/DAI puts.
Future: a decentralized options protocol with the features of a centralized options exchange like @DeribitExchange.
7/ How does Hegic make $?
HEGIC token = economic (settlement fees) & governance (voting) rights.
Governance (e.g. premium & settlement fees, supported strike prices, hedge contracts & pool assets) to be implemented after 100 MAUs.
HEGIC token = economic (settlement fees) & governance (voting) rights.
Governance (e.g. premium & settlement fees, supported strike prices, hedge contracts & pool assets) to be implemented after 100 MAUs.
8/ Proof-of-HODL discounts & perks:
Buyers get a 30% discount on premium fees by proving a HEGIC token balance > contract value.
LPs get priority to unlock liquidity from the pool by proving a HEGIC token balance > liquidity value.
Buyers get a 30% discount on premium fees by proving a HEGIC token balance > contract value.
LPs get priority to unlock liquidity from the pool by proving a HEGIC token balance > liquidity value.
9/ Token distribution:
HEGIC token to be launched 5/5/2020. Initially, 10% of total supply will be distributed to set up a development foundation for the protocol.
The whitepaper outlines a vesting-like (subject to milestones) schedule for subsequent token distributions:
HEGIC token to be launched 5/5/2020. Initially, 10% of total supply will be distributed to set up a development foundation for the protocol.
The whitepaper outlines a vesting-like (subject to milestones) schedule for subsequent token distributions:
fin/ Shoutout:
The Q&A between @DeFi_Dad, @DegenSpartan & @0mllwntrmt3 in the Hegic discord served as great inspiration for this thread.
The Q&A between @DeFi_Dad, @DegenSpartan & @0mllwntrmt3 in the Hegic discord served as great inspiration for this thread.
