Features

Neon Hedge (the platform) has a set of OTC tools

Neon Hedge, our pioneer and premier platform form our ecosystem, will offer investors the ability to hedge or speculate in hedges using the following tools:

• Equity Swaps

• Call Options

• Put Options

These tools are OTC meaning there has to be a party on each end of the deal or hedge.

Neon Protocol synthesized tools that work around the missing pieces, to arrive at the same hedging outcome that traditional hedging tools provide to investors. This is because the crypto markets are unique in nature in comparison to traditional markets.

For instance, in crypto everything has to be done trustlessly and there are no registered third party escrow services like clearing houses. Risk free rates do not apply to ERC20 tokens, and as such to even calculate the cost of a normal call option using the traditional formula is impossible.

Hedging Processes

Neon Protocol synthesized tools that work around the missing pieces.

As such, this is the complete hedging process on our platform

• First both parties deposit ERC20 token collateral into our vault.

• Then proceed to go write or buy hedges on the OTC markets.

• Underlying asset is the ERC20 token being hedged.

• All hedges are OTC traded, willing buyer and seller, P2P.

• Writer stipulates the desired cost and strike price, there are no limits.

• Cost currency is inherently the paired currency of the underlying asset on DEX.

• Collateral is locked for both parties until settlement

• Hedges are only settled upon expiry not before.

• Settlement can be triggered by the parties, or hedge miners who settle trades for a fee.

• Fees are only charged upon settlement, and payoffs and costs also allocated then.

• Hedge miners and the protocol both only charge a fee on the payoff.

• Payoff is based on outcome on expiry, and done in underlying or paired currency only.

• Cost for options is credited to writer as in traditional markets.

• Max loss is "underlying asset value" for the writer, but "cost paid" for the taker.

Features List

This is our protocols features list. This list is always at per time of development and is subject to additions, as the protocol is being developed recursively.

• Deposit any ERC20 token

• Withdraw any ERC20 token

• Write hedge, put option, call option, equity swap, using deposit balance as collateral

• Determine underlying value of underlying assets being hedged

• Determine value and cost in paired currency of the underlying assets

• Lock in collateral from both parties

• Update usermap token balances, collateral used in deal is credited to locked balances

• Buy hedge in paired currency of underlying assets

• Track payoff and other hedge data in realtime

• Send topup requests to other party

• Send zap requests to other party

• Settle hedge on expiry, triggered by any party or miner

• Restore usermap balances for tokens credited from settlement

• Reward miner for settling deals as they expire

• Charging fees for withdrawal

• Charging fees on settlement payoff

• Read token balances for wallet addresses

• Read hedge data using hedge ID

• Read hedges arrays

• Read protocol fee data

Underlying assets refers to ERC20 tokens being hedged.