First and foremost, please consider learning options basics. If you are waiting for the HEGIC token release but have no idea what options are and why Hegic can become one of the best options protocols in the DeFi space, your personal understanding of the Hegic protocol can be easily improved.
Trading options with Hegic is simple.
You are choosing a strike price (a “strike price” is your “bet” that the market price of an asset will be higher or lower than this price during a certain period of time). You are paying a fixed price for an option. You can’t lose more than the amount that you are paying for an option.
Your option contract has a break-even price. If you are right and the price of an asset goes in the direction that you have chosen, your profits are unlimited in call options (and substantial in put options).
When trading call options, you will receive net profits as a difference between the market price (which should be higher) and the strike price (which should be lower) at the moment of exercising.
And when trading put options you will receive net profits as a difference between the strike price (which should be higher) and the market price (which should be lower) at the moment of exercising.
You need to manually exercise your in-the-money options contracts. After exercising your options you will receive net P&L to your Ethereum address.
Learn options basics in 30 minutes: https://hegic.gitbook.io/start/
Crypto Options Market is Booming
Good news: crypto options (BTC and ETH) are moving extremely fast from millions in open interest and volumes to billions. Great news: there is no hype around options and this growth has nothing to do with FOMO. Options products are becoming more popular thanks to the organic growth, new capital inflows, better liquidity and high volatility of assets.
Look at these charts:
The Hegic protocol is also experiencing steady monthly growth:
Hegic Protocol and the Crypto Options Market: Millions, Billions… Tens of Billions?
Let’s try to extrapolate into the future what we see in the crypto options market today. Say, the crypto options open interest and options daily volumes will grow x10 in the next three years. With the data from the charts above as a foundation for the projections, this is more than possible.
Now let’s imagine that Hegic will have a 1% market share in year 2023:
Settlement fees (currently 1% of each option’s size) that are paid in ETH and WBTC by options buyers will be accumulated on the HEGIC staking contracts. The protocol’s fees will be somewhat equal to 1% of the open interest. Note that these are the high level calculations which are pretty much wrong as the open interest is a dynamic indicator and changes each time options are bought or sold. There is no possibility to make accurate calculations at this point of time. This is more like a leap into the future and visionary extrapolation than an actionable data.
As it has been stated in the HEGIC token-economics announcement article:
The Hegic protocol generates settlement fees in Ether (ETH) and WBTC paid each time an option contract is bought. People are able to acquire HEGIC tokens and activate a staking lot that gives its holder a right to receive staking rewards. 100% of settlement fees in ETH and WBTC generated by the protocol are distributed among the staking lots holders.
• Amount of tokens required for a staking lot: 888,000 HEGIC
• Maximum staking lots available: 3,000
• 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
Let’s calculate fees per HEGIC token for the coming years. In year 2023 the HEGIC circulating supply will be lower than the total supply because liquidity mining & utilization rewards phases will still be in progress. Some of the HEGIC tokens might still be allocated on the bonding curve contract waiting for their holders. Some of the HEGIC tokens will be actively traded on DEXes, AMMs and other venues. For calculating F/T (fees per token) let’s assume that 44.25% of total supply will be locked in HEGIC staking lots. This is a half of all HEGIC tokens that can be locked in staking with 3,000 staking lots maximum available: ~1,332,815,000 HEGIC (1,500 staking lots).
With a start price of $0.0027 and the initial fully diluted market capitalization of the Hegic protocol $8,000,000 during the HEGIC token launch (09/09/2020), the future for the HEGIC token holders looks bright:
As you can see, having a 1% market share could lead to decent settlement fees inflows for HEGIC staking lots holders. With settlement fees distribution among the active staking lots holders instead of a centralized options exchange revenues distribution, HEGIC token’s value capture mechanism can become one of the world’s first options trading protocol’s flywheels.
P.S.: But what if…
x1922 KEK LMAO x1922 PARTY IS COMIN’ x1922
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