What is Premia Finance? Premia is a decentralized options marketplace based on a pool-to-peer architecture similar to Uniswap or SushiSwap, but for options. Let’s find out what is special about this project with Weakhand in this article.
What is Premia Finance?
Premia Finance is a decentralized options market based on a pool-to-peer architecture similar to Uniswap or SushiSwap, but for options.
Users can buy options on Premia Finance by selecting the details of the option they want to trade, such as token pair, strike price, and expiration date.
After making the transaction, the options contract will be recorded as an ERC-1155 standard NFT. This NFT contains option information the user has just exercised such as: trading pair, exercise price, expiration date, etc. and sent to the user’s personal wallet.
Users can do it Call options and Put options on Premia Finance.
For call options:
If at the time of exercise, the price of the underlying asset rises above the user’s strike price, the call option is considered have money.
For example: A user exercises a call option for 2 ETH/DAI, with a strike price of 3,500 DAI. At the time of execution, the ETH price was 4,000 DAI. Users receive the difference between the strike price and the spot price (4,000 – 3,500), multiplied by the number of options they own. In this case, the user is entitled to 1,000 DAI, paid in ETH. Therefore, the user receives (1,000/4,000 ETH) = 0.25 ETH for doing so.
For Put options:
If at the time of exercise, the price of the underlying asset is lower than the user’s strike price, the put option is considered have money.
For example: A user exercises a put option for 2 ETH/DAI, with a strike price of 3,000 DAI. At the time of execution, the ETH price was 2,700 DAI. Users receive the difference between the strike price and the spot price (3,000 – 2,700), multiplied by the number of options they own. In this case, the user receives 600 DAI.
At expiration, an option will have two states: exercised or expired worthless. When an option is exercised, the option holder receives the payoff and profit.
Premia uses automated tools like Chainlink Keepers to process expired options on a daily basis, to ensure maximum capital efficiency and the best user experience for protocol users.
Participating components on Premia Finance
Main components participating on the Premia Finance platform:
- User: Participate in services on the Premia Finance platform such as: exercising options, swapping tokens, staking, ….
- Liquidity Providers (LP): Participate in providing liquidity to the platform to receive rewards and premiums for user options.
For Liquidity Providers: Each trading pair will have 2 groups: Call group and Put group. Liquidity Providers have the right to participate in providing liquidity to any pool. With a group of call options (Call) in underlying assets (WBTC, ETH, LINK) and a group of put options (Put) in DAI.
Additionally, liquidity providers can use Premia Finance’s smart router, which allocates assets into pools for providers.
What is the Difference of Premia Finance?
Premia Finance uses a Black-Scholes-based pricing algorithm combined with regulators that use supply and demand to steer prices to market equilibrium between creators and recipients of pool liquidity.
Liquidity of liquidity providers (LPs) on Premia Finance is arranged in a first-in, first-out order. When an options contract is activated, Premia Finance will scan the necessary liquidity windows to cover the buyer’s position while locking in liquidity and minting 1 ERC-1155 NFT for LPs. LPs will receive their assets when the options expire.
LPs can proactively provide liquidity in groups of calls and puts that suit their market direction.
Core Team
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Investor
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Tokenomics
Basic information about tokens
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Token Name: Premia Finance
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Ticker: PREMIA
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Blockchain: Arbitrum
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Contract: 0x51fc0f6660482ea73330e414efd7808811a57fa2
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Token Type: Utility
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Total Supply: 100,000,000 PREMIA.
Token Allocation
Token Release
Token Use Case
PREMIA tokens are used to participate in Staking on the Premia Finance platform.
When Staking PRMIA tokens, users will receive vxPREMIA.
vxPREMIA is used to:
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Participate in voting activities on Premia Finance.
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Prorate the platform’s transaction fee distribution.
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Reduced transaction fees.
Exchanges
FIL can be traded on both CEX and DEX exchanges such as: SushiSwap, Uniswap (V3), BKEX,…
Information Channel of Premia Finance Project
- Website: https://premia.finance/
- Twitter: https://twitter.com/PremiaFinance
- Discord:
summary
Options are still a new market in crypto. However, it has proven its advantages in the traditional market. Premia Finance has achieved certain successes in the recent period. However, to attract more users, Premia Finance still has to put in a lot of effort to improve its products. Hopefully the above information helps you understand what Premia Finance is?