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Options Specs

Terms
Specifications
Underlying
An asset, a basket of assets, rates, and event outcomes from a decentralized oracle can be accepted as underlying. In the initial phase the whitelisted underlying include: BTCUSD, ETHUSD
Strike Price
To avoid the “too-many-strikes” problem, inputs are rounded with precision up to 8 decimals. Examples:  1) a five-figure BTC price (27001.50) will round to the fourth figure (27000);  2) a four-figure ETH price (1799.50) will round to the third (1700);  3) a doge price (if supported at 0.071535) will round to (0.071)
Trading hours
24/7
Expiry
The contract supports the creation of pools with the daily settlement at UTC 8:00. Daily, weekly, and monthly expiry selections are offered in the app interface for ease of interaction. Weekly and monthly expiries occur on UTC 8:00 on Fridays.
Collateral 
In the initial phase of Divergence, a whitelist of ERC-20 tokens is supported as quote assets for digital options. This whitelist can expand as demanded by the community. Such a whitelist is necessary for this phase to detect any unforeseen issues and concentrate liquidity. As liquidity and volumes expand, this whitelist will be removed via admin functions of the smart contract. The initial whitelist includes WETH, WBTC, and USDT. When ETH is used as collateral, the contract converts it to WETH.
Quotation 
Options are quoted per unit of collateral, with a minimum price of 0.01 collateral units and a maximum of 0.99 collateral units.
Settlement 
Options tokens are exercised at expiry. Depending on the collateral in use, options are cash-settled when a stablecoin is used as collateral or physically settled when an asset token such as WETH is used as collateral. 
A fixed payout of 1 collateral unit is claimable per each in-the-money option. A call (Spear token) is in-the-money when the underlying price settles above or equal to the strike price; otherwise, a put (Shield token) is in-the-money.
A liquidity position will pay out 1 collateral unit for each shorted in-the-money option. For each out-of-money option, liquidity providers can reclaim 1 reserved collateral.
Settlement Price
Underlying price feed via heartbeat updates provided by Chainlink. For more information, visit here.
Seed Deposit
For a liquidity position intended to sell 1 call (or 1 put) at the price of N collateral (0.01≤ N ≤ 0.99), the required collateral deposit is 1 - N. One can also seed 1 call (or 1 put) to a liquidity range above the current call (or put) price, to limit close this long exposure.
Reserved for Settlement
Anytime prior to expiry, liquidity can be removed from a position to finalize options exposure. A liquidity position can passively short both calls and puts, and collaterals must be reserved to pay off sold options, in case they expire profitably. Collaterals reserved for settlement are for the larger short interest; however, a liquidity provider's exposure is only limited to his net shorts in calls or puts, after offsetting call sales and put sales. 
Position Limit
None
Minimum Size
None. (Each transaction costs gas, however)
Fees
Pools are set to a default transaction fee rate of 0.3% per notional. ie, for each option token sold, 0.003 collateral units is applicable as fees. An exercise fee of 0.15% is applied when a holder of an in-the-money option claims payoff at settlement. For more information, please refer to Fees. 
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Terms	Specifications
Underlying	An asset, a basket of assets, rates, and event outcomes from a decentralized oracle can be accepted as underlying. In the initial phase the whitelisted underlying include: BTCUSD, ETHUSD
Strike Price	To avoid the “too-many-strikes” problem, inputs are rounded with precision up to 8 decimals. Examples: 1) a five-figure BTC price (27001.50) will round to the fourth figure (27000); 2) a four-figure ETH price (1799.50) will round to the third (1700); 3) a doge price (if supported at 0.071535) will round to (0.071)
Trading hours	24/7
Expiry	The contract supports the creation of pools with the daily settlement at UTC 8:00. Daily, weekly, and monthly expiry selections are offered in the app interface for ease of interaction. Weekly and monthly expiries occur on UTC 8:00 on Fridays.
Collateral	In the initial phase of Divergence, a whitelist of ERC-20 tokens is supported as quote assets for digital options. This whitelist can expand as demanded by the community. Such a whitelist is necessary for this phase to detect any unforeseen issues and concentrate liquidity. As liquidity and volumes expand, this whitelist will be removed via admin functions of the smart contract. The initial whitelist includes WETH, WBTC, and USDT. When ETH is used as collateral, the contract converts it to WETH.
Quotation	Options are quoted per unit of collateral, with a minimum price of 0.01 collateral units and a maximum of 0.99 collateral units.
Settlement	Options tokens are exercised at expiry. Depending on the collateral in use, options are cash-settled when a stablecoin is used as collateral or physically settled when an asset token such as WETH is used as collateral. A fixed payout of 1 collateral unit is claimable per each in-the-money option. A call (Spear token) is in-the-money when the underlying price settles above or equal to the strike price; otherwise, a put (Shield token) is in-the-money. A liquidity position will pay out 1 collateral unit for each shorted in-the-money option. For each out-of-money option, liquidity providers can reclaim 1 reserved collateral.
Settlement Price	Underlying price feed via heartbeat updates provided by Chainlink. For more information, visit here.
Seed Deposit	For a liquidity position intended to sell 1 call (or 1 put) at the price of N collateral (0.01≤ N ≤ 0.99), the required collateral deposit is 1 - N. One can also seed 1 call (or 1 put) to a liquidity range above the current call (or put) price, to limit close this long exposure.
Reserved for Settlement	Anytime prior to expiry, liquidity can be removed from a position to finalize options exposure. A liquidity position can passively short both calls and puts, and collaterals must be reserved to pay off sold options, in case they expire profitably. Collaterals reserved for settlement are for the larger short interest; however, a liquidity provider's exposure is only limited to his net shorts in calls or puts, after offsetting call sales and put sales.
Position Limit	None
Minimum Size	None. (Each transaction costs gas, however)
Fees	Pools are set to a default transaction fee rate of 0.3% per notional. ie, for each option token sold, 0.003 collateral units is applicable as fees. An exercise fee of 0.15% is applied when a holder of an in-the-money option claims payoff at settlement. For more information, please refer to Fees.

Convertible Liquidity

Fees

Last modified 1mo ago