Conclusion

After in depth analysis, the solution is to customize our hedge structures and valuation models, and find something that best fits the ERC-20 market.

This method is not ideal for pricing options considering the volatility is very high for ERC-20 tokens, thus rendering the cost insignificant compared to the potential profit.

Xeon Protocol resolved to instead allow users to use OTC prevailing rates to price a premium for a hedge they write, options demand and token trend will be factors.

In our case the goal of creating ERC-20 options is to:

  • provide hedging tools for investors to manage risk

  • provide speculative opportunities for traders and farmers

  • leverage capital for more gains

  • lock in profit on assets

This requires the premium on deals to be significant enough not negligible, it benefits no-one in a free market.

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Xeon Protocol Š 2024