Xeon Protocol
  • 🪐Welcome to Xeon
    • Introduction
    • Challenges
    • Mission
    • Ecosystem
    • Products
  • ✨OTC Tools
    • Features
    • Equity Swaps
    • Call Options
    • Put Options
  • 💻How It Works
    • Use Cases
    • Quick Guide
    • What Happened
    • P/L Calculations
  • 🔓Staking NEON
    • How to Stake
    • Assignments
    • Rewards
  • 🌾Real Yield
    • Protocol Income
    • Yield Farming
    • Farming Pools
    • Native Hedge Liquidity
    • Native Loan Collateral
  • 👨‍🌾EARN WITH US
    • How to Earn
    • Hedge Mining
  • ☄️Fees
    • Model
    • Cashier Fees
    • Settlement Fees
  • ⚡Costing and Valuation
    • Highlights
    • Value in Pair Currency
    • Underlying Value
  • 💸ERC20 Hedging
    • Traditional Hedging
    • Blockchain Hedging
    • Neon Hedging Model
    • Traditional Costing Models
      • Binomial VS Monte Carlo
      • Binomial Model
      • Costing Example
      • Conclusion
    • Neon Costing Model
    • Writing Approach
    • Settlement
  • 🪶ERC20 Lending
    • Crypto Lending
    • Neon Lending Model
    • Neon Valuation Model
    • Writing Approach
    • Settlement
  • ⚙️Mechanics
    • ERC20 Vault Model
    • ERC20 Deposit/Withdraw
    • getPairAddress
    • Underlying Value
    • Write
    • Buy
    • Topup
    • Zap
    • Settlement
    • Mining
    • LockedInUse
    • 🧑‍🚀Development
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  • Factors Defined:
  • Other Definitions:
  • Creating - Writing a Hedge

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  1. ERC20 Hedging

Writing Approach

How we compose a ERC20 hedge on Xeon Protocol.

Hedge structure factors:

  • Underlying assets - ERC20 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.

Creating - Writing a Hedge

You can write: Call Options, Put Options and Equity Swaps using your ERC20 tokens as underlying assets.

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

  1. Hedge Type

  2. ERC20 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

That's it! Our protocol functions handles the rest.

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Last updated 1 year ago

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