Writing Approach

How we compose a ERC-20 hedge on Xeon Protocol.

Hedge structure factors:

• Underlying assets - ERC-20 tokens

• Strike Price

• Premium / Cost

• Expiry Date

• Underlying Value - Seller Collateral Value

• Strike Value

Factors Defined:

Underlying Assets - refers to the ERC20 tokens the seller or writer hedges.

Strike Price - refers to the price in paired currency the tokens being hedged have to cross

Premium - refers to the cost or price the buyers have to pay to buy the rights to the hedge

Expiry Date - refers to a future date to which the hedge expires and settlement follows.

Underlying Value - refers to the value in paired currency, of the underlying assets or ERC20 tokens in the hedge. These are the tokens being hedged by the seller or hedge writer.

Other Definitions:

Settlement Value - refers to the market value in paired currency of the underlying assets at the time of settlement.

Payoff - refers to the profit or proceeds credited to the winning party, taken from the losing party's collateral.

Writing a Hedge

You can write: Call Options, Put Options and Equity Swaps using your ERC-20 tokens as underlying assets or collateral.

In order to write a hedge on our protocol you need to specify these 4 parameters::

1. Hedge Type

2. ERC-20 Token Address - of the underlying assets being Hedged

3. Token Amount - amount of tokens to use as underlying assets or collateral

4. Premium or Cost - in paired currency to buy the hedge

5. Expiration Date - the day or timestamp at which the hedge expires for both parties

After filling those parameters on our Dapp, the Writer simply clicks "write" to submit the transaction to our protocol. Our protocol handles the rest, deducting the Writers deposit balances in the Vault, then locking them in the deal as collateral at market value, until settlement is triggered.

That's it!