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.