Introduction
Hegic is an on-chain peer-to-pool options trading protocol built on Ethereum. The protocol has been released on 20/02/2020. The open sourced codebase can be found in the public GitHub repositories.
Do you really love the old world of options where you needed to know everything about greeks, skew, IV vs RV, delta, gamma, theta, vega, rho, shorting vol, longing vega, spreads, straddles, strangles and delta hedging?
Yes, the options boomers will tell you that without deep understanding of these principles you have no moral right to trade options. They want you to stay away from options because they hate it when you are taking their profits.
It is time to change the global options game.
The Hegic protocol pioneers a peer-to-pool approach to options trading. It works like an AMM (automated market maker) for options. You can trade non-custodial on-chain call and put options as an individual holder using the simplest and intuitive interfaces. Use MetaMask, Trust Wallet or Argent wallets to trade options without KYC, email or registration required.
Want to earn yield on selling call and put options? You can automatically sell options as one of the liquidity providers. Deposit funds to the liquidity pools to start simultaneously selling options to thousands of buyers. Your capital will be utilized in each option bought in the protocol and you will be receiving pro rata premiums. No manual involvement is required from you.
Why Hegic is the best option:
- Non-custodial options trading;
- Verified on-chain settlement;
- All options are collateralized;
- Any strike price is available;
- Exercise early (American-style);
- Censorship-resistant (no KYC);
- Mobile compatible interfaces;
- Diversification by design for LPs.
TL;DR Version
• HEGIC token launch: 09/09/2020, 15:00 EST / 19:00 UTC
• Total supply: 3,012,009,888 HEGIC (fixed supply, not mintable)
• Start price: 0.0000069 ETH / HEGIC (~$0.0027)
• Initial fully diluted market capitalization of the protocol: $8,000,000
The HEGIC token will be listed on the bonding curve contract that will be accessible on the Hegic website interfaces on 09/09/2020, 15:00 EST / 19:00 UTC: https://www.hegic.co/ This contract will be the main liquidity venue for HEGIC during the first 4 weeks after the launch.
• Liquidity mining & utilization rewards: 1,204,809,000 HEGIC (40%)
• Rewards allocation: 80% — liquidity providers, 20% — holders
• Rewards in HEGIC tokens: 963,847,200 (80%) / 240,961,800 (20%)
• HEGIC rewards unlock: A milestone-tailored event (trading volume)
• Distribution mechanism: Weekly distribution proportional to liquidity provided to WBTC and ETH pools / WBTC and ETH active options sizes
• Token functionality: Acquiring HEGIC staking lots, governance
• Staking rewards: ETH and WBTC (100% of settlement fees)
• Staking rewards size: 1% of each option’s size in ETH and WBTC
• Rewards distribution: Same % per each active staking lot
• Amount of tokens required for a staking lot: 888,000 HEGIC
• Maximum active staking lots: 3,000
The HEGIC token-economics infrastructure consists of 5 core parts:
≌ HEGIC Token
≙ Bonding Curve
≜ HEGIC Staking
≝ Balancer Pool
≋ Liquidity Mining & Utilization Rewards
In this article you will learn about the HEGIC token design, its functionality, liquidity venues, staking and the ways of earning rewards in HEGIC.
≌ HEGIC Token
• Token standard: ERC20
• HEGIC token on Etherscan: https://etherscan.io/token/0x584bC13c7D411c00c01A62e8019472dE68768430
Beware of scams. Always double-check the contracts addresses.
• HEGIC Token Distribution:
- 3,012,009,888 HEGIC tokens
(fixed total supply, not mintable) - 20% (602,402,000 HEGIC): Early Contributors
- 10% (301,200,988 HEGIC): Hegic Development Fund
- 40% (1,204,809,000 HEGIC): Liquidity M&U Rewards
- 25% (753,001,000 HEGIC): Bonding Curve
- 5% (150,596,900 HEGIC): Balancer Pool
• 20% of HEGIC tokens will be distributed among the early contributors who have acquired them when almost nobody in the universe has ever heard about the protocol. These contributors are the true Hegic believers. They are active users of the protocol who have stayed on board during the hard times and will be there in the great times that are coming for Hegic. The funds attracted from early contributors were used for paying for security audits, paying out refunds and for continuous development of the protocol.
Early Contributors Vesting Structure:
Sep 2020: 25% (150,600,000 HEGIC) unlocked on day 1;
Sep 2020 — Mar 2022: 451,802,000 HEGIC are being vested; 25,100,000 HEGIC will be unlocked on a monthly basis during a 18-months period.
• 10% of tokens will be allocated in the Hegic Development Fund. These funds will be used for supporting the long-term development of the protocol, paying the future protocol devs and covering operational expenses. Also these tokens are the long-term incentive for the creator of the Hegic protocol.
Hegic Development Fund Vesting Structure:
Sep 2020: 25% (75,300,000 HEGIC) unlocked on day 1;
Sep 2020 — Sep 2023: 225,900,000 HEGIC are being vested; 6,275,000 HEGIC will be unlocked on a monthly basis during a 36-months period.
• 40% of tokens will be allocated on the Liquidity Mining & Utilization Rewards contracts. Liqudity providers and options holders will be receiving HEGIC tokens during a three years long M&U rewards program.
• 25% of tokens will be allocated on the Bonding Curve contract. This contract will be the primary liquidity venue for HEGIC tokens. People will be able to acquire HEGIC tokens with ETH using the bonding curve contract.
• 5% of tokens will be allocated in the Balancer pool for creating a liquid secondary market for HEGIC tokens. The pool swap fee will be 0.1%.
≙ Bonding Curve
The HEGIC token price increases as the supply of the token increases. When a new buyer has acquired the HEGIC token, each subsequent buyer will have to pay a slightly higher price for each token. As more people will discover Hegic protocol and buying continues, the value of each token gradually increases along the bonding curve.
• Initial fully diluted market cap: $8,000,000
• Amount of tokens allocated: 753,001,000 HEGIC
• Start price: 0.0000069 ETH / HEGIC (~$0.0027)
• Multiplier: 0.00000000001 ETH (~$0.0000000039)
• Last price: 0.007537 ETH / HEGIC (~$2.93)• ETH-HEGIC swap fee: 0%
• HEGIC-ETH swap fee: 10%
(5%: HEGIC staking lots holders,
5%: Hegic Development Fund)
Each time HEGIC tokens are acquired using the bonding curve contract, the ETH-HEGIC swap transaction increases the price of HEGIC token for a fixed value. This value is called a bonding curve multiplier or a slope. The multiplier is hardcoded into the HEGIC bonding curve contract and cannot be changed in the future. The multiplier is 0.00000000001 ETH.
As token holders buy and sell HEGIC tokens using the bonding curve contract, the price increases or decreases. The contract itself is used as a price oracle.
The initial HEGIC token price is hardcoded into the bonding curve contract: 0.0000069 ETH / HEGIC (~$0.0027). The amount of HEGIC tokens allocated on the contract: 753,001,000 HEGIC (25% of total supply).
If a token holder wants to swap her HEGIC token for ETH using the bonding curve contract, she will pay a 10% swap fee on this transaction. 5% of this fee will be distributed among active HEGIC staking lots and 5% will be allocated in the Hegic Development Fund.
With a fixed multiplier of 0.00000000001 ETH hardcoded into the bonding curve contract the final price of HEGIC token will be 0.007537 ETH per HEGIC (753,001,000 * 0.00000000001 + 0.0000069 (start price)).
When the last token (753,001,000th) will be acquired on the bonding curve contract, the fully diluted market capitalisation of the Hegic protocol will be ~$8.8B (3,012,009,888 *0.007537 ETH * 390(ETH price)).
≜ HEGIC Staking
The Hegic protocol generates settlement fees in Ether (ETH) paid each time an option contract is bought. People are able to acquire HEGIC tokens and activate a staking lot that gives it’s holder a right to receive staking rewards. 100% of settlement fees in ETH generated by the protocol are distributed among the active staking lots holders.
• Amount of tokens required for a staking lot: 888,000 HEGIC
• Maximum staking lots available: 3000
• Maximum amount of HEGIC locked in staking: 2,664,000,000 HEGIC
• Maximim share of HEGIC total supply locked in staking: 88.5%• Staking rewards source: 100% of settlements fees paid by buyers
• Staking rewards size: 1% of each option’s size in ETH and WBTC
• Staking rewards are accumulated and distributed in: ETH and WBTC
• Staking rewards distribution: Same % per each active staking lot
• Staking lot lock-up period: 30 days
• Staking lot unlock period: 7 days
Settlement fees (currently 1% of each option’s size) are paid in ETH and WBTC by options buyers and accumulated on the HEGIC staking contracts.
To start earning settlement fees, one should acquire HEGIC tokens and lock them on the staking contract. The required lock-up period is 30 days. During this period a token holder won’t be able to withdraw HEGIC tokens from the staking contract. After this period, a token holder can initiate the withdrawal.
After HEGIC tokens are deposited to the staking contract, a token holder becomes an active HEGIC staking lot holder. She starts to receive pro-rata settlement fees in ETH accumulated on the staking contract. She will be receiving settlement fees starting from the first fee that will be accumulated on the contract after her deposit of HEGIC tokens on the staking contract.
The required unlock period is 7 days. After requesting a withdrawal of HEGIC tokens from the staking contract, a token holder has to wait for 7 days before her tokens will be unlocked for a withdrawal. After this period, a token holder can withdraw HEGIC tokens to her Ethereum address.
Each active HEGIC staking lot receives a fixed percent of settlement fees paid out in staking rewards. For example, if there will be ten active staking lots, each of them will be receiving 10% of rewards; one hundred active staking lots — each of them will be receiving 1% of rewards; one thousand active staking lots — each of them will be receiving 0.1% of rewards.
≋ Liquidity Mining & Utilization Rewards
The purpose of three Liquidity M&U Rewards phases is to let the users of the Hegic protocol to become its owners. Liquidity providers and options buyers vote with their wallets for the protocol. That is why they have to be able to influence its future and own a fraction of the protocol.
Phase I: 12 months (09/09/2020–09/09/2021)
481,800,000 HEGIC: Phase I Liquidity Mining Rewards
1,320,000 HEGIC/day distributed pro rata among liquidity providers120,450,000 HEGIC: Phase I Liquidity Utilization Rewards
330,000 HEGIC/day distributed pro rata among options holders
◔ A milestone-tailored Phase I rewards unlock:
Phase I tokens will be unlocked after the cumulative on-chain trading volume on Hegic during the Phase I exceeds $100M or on 10/10/2021.
The Phase I rewards unlock ceremony will take 6 months. During this period of time Phase I rewards will be unlocked on a weekly basis (4.17% of Phase I rewards per week) and token holders will be able to claim them with 100% of Phase I rewards distributed at the end of the ceremony.
Phase II: 12 months (10/10/2021–10/10/2022)
361,350,000 HEGIC: Phase II Liquidity Mining Rewards
990,000 HEGIC/day distributed pro rata among liquidity providers91,250,000 HEGIC: Phase II Liquidity Utilization Rewards
250,000 HEGIC/day distributed pro rata among options holders
◑ A milestone-tailored Phase II rewards unlock:
Phase II tokens will be unlocked after the cumulative on-chain trading volume on Hegic during the Phase II exceeds $1B or on 11/11/2022.
The Phase II rewards unlock ceremony will take 9 months. During this period of time Phase II rewards will be unlocked on a weekly basis (2.77% of Phase II rewards per week)and token holders will be able to claim them with 100% of Phase II rewards distributed at the end of the ceremony.
Phase III: 12 months (11/11/2022–11/11/2023)
120,450,000 HEGIC tokens: Phase III Liquidity Mining Rewards
330,000 HEGIC/day distributed pro rata among liquidity providers29,200,000 HEGIC tokens: Phase III Liquidity Utilization Rewards
80,000 HEGIC/day distributed pro rata among options holders
◕ A milestone-tailored Phase III rewards unlock:
Phase III tokens will be unlocked after the cumulative on-chain trading volume on Hegic during the Phase III exceeds $10B or on 12/12/2023.
The Phase III rewards unlock ceremony will take 12 months. During this period of time Phase III rewards will be unlocked on a weekly basis (2.09% of Phase III rewards per week) and token holders will be able to claim them with 100% of Phase III rewards distributed at the end of the ceremony.
≝ Balancer AMM Pool
The HEGIC/USDC pool on Balancer will be launched after ~4 (four) weeks of price discovery process. The bonding curve contract will be used for the initial launch of HEGIC token (see ≙ Bonding Curve section).
• Amount of tokens allocated: 150,596,900 HEGIC
• Start price: TBA (the bonding curve price after a 4 weeks period)
• Pool ratio: 80% HEGIC / 20% USDC
• Swap fee: 0.1%
Note that the Balancer HEGIC/USDC pool parameters are subject to change. Other pool configuration parameters can be added, updated or changed.
More articles on HEGIC token-economics, staking, governance, !!! RISKS !!! and guides will be published on a weekly basis in the next 30 days (two articles a week). Gotta catch ’em all!
Learn more about Hegic
DISCLAIMER: ACQUIRING/HOLDING/OWNING/USING HEGIC TOKENS DOES NOT PROVIDE/GUARANTEE YOU OR ANYBODY ELSE DIVIDENDS OR ANY KIND OF RETURNS. ACQUIRING HEGIC TOKENS DOES NOT PROVIDE YOU WITH ANY RIGHTS IN ANY JURISDICTION. HEGIC TOKEN IS NOT A CURRENCY BUT AN INTERNET DIGITAL UNIT OF NON-FINANCIAL UTILITY THAT CAN BE USED SOLELY IN THE HEGIC PROTOCOL. THE HEGIC PROTOCOL SHALL NOT BE LIABLE TO YOU OR ANYBODY ELSE FOR ANY DAMAGE OR(AND) LOSSES IN ANY CONNECTIONS WITH HEGIC TOKENS. IF YOU DO NOT AGREE WITH ANY PART OF THIS DISCLAIMER PLEASE CONSIDER LEAVING THIS WEBSITE AND NEVER ACQUIRE/HOLD/OWN/USE HEGIC TOKENS.
