Premia is a decentralized options market based on a pool-to-peer architecture, similar to Uniswap or SushiSwap, but for options.
Users can purchase American-style options on Premia’s custom AMM by first selecting the details of the option they'd like to trade, like the token pair, strike price, and maturity. Once the details have been entered, the user will receive a quote denoted in terms of the underlying asset for call options or the base asset for put options. If the user agrees with the price, they can execute the transaction to facilitate the trade and purchase the option for the quoted price.
If users purchase an option with an asset other than the default payment token, the user's asset will be swapped to the payment token on the DEX with the best price before purchasing the option. This is done in a single transaction to ensure the best user experience.
All of the liquidity (capital) in the pools for trading options is provided by other users of the protocol called Liquidity Providers (LPs). When a trader purchases an option, another user, who has previously provided capital to the pool (an LP), simultaneously underwrites the option to the buyer. All options on Premia are fully collateralized, meaning the underwriters' tokens are locked in the option from purchase until settlement, to ensure the full exercise value of an option can always be paid out to option holders.
Together Concave and Premia plan to develop better pricing, better liquidity, better education and better/more product for the collective community.
There is a 3% fee on all options purchased and redeemed, 80% of this fee is used to buy and distribute Premia to xPremia stakers (similiar to sushiswap model). Premia stakers also get discount up to 95% on the protocol features if they stake premia. Concave wants to
- 1.Accumulate premia as an asset and stake and earn yield from the protocol
- 2.Whitelist our contract so you can provide LP using our treasury to earn yield
- 3.Use their features to hedge our treasury assets against volatility
- 4.Collobrate and build innovative bond features using Premia options
We believe that Premia offers a suite of tools that would greatly benefit our treasury growth and management and are excited that they are one of the first batch of partners and hope we can work and build together for the forseeable future.