Hegic: A New Age Options Trading Protocol

Key Takeaways

  • Hegic is an options protocol taking a fresh approach to minting and trading options.
  • The protocol provides customers the ability to build options with customized strike prices and expiries, reminiscent of the OTC market.
  • Selling options on Hegic is easier than ever, as the protocol employs general purpose liquidity pools that generate passive yields.
  • The HEGIC token will launch on September 9 with a liquidity mining program that rewards both option holders and liquidity providers.

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Hegic is an options trading protocol built on the Ethereum blockchain. Users can buy or sell call and put options using Hegic. It is entirely on-chain, permissionless, and non-custodial – as all DeFi products should be.

What Is Hegic?

Options are a vital building block of financial services. They are the foremost form of market insurance and allow traders to implement robust risk management strategies.

As Ethereum’s DeFi stack grows more diverse, a comprehensive solution to create and trade options is a necessity. Hegic is attempting to cater to that necessity with options that are settled and verifiable on-chain.

When it first launched, Hegic got off to a rough start. But each mishap helped the protocol tweak certain features and make the end-product more resilient.

Using Hegic is reasonably straightforward.

To buy an option on Hegic, investors have to pay the prevailing premium for whichever option they wish to purchase. This option can be exercised at any time, as Hegic’s options specifications follow American style execution.

Hegic Options
Source: Hegic

Selling options on Hegic is easier than selling traditional options. All investors need to do is deposit funds into the ETH or DAI pool. Capital in the ETH pool is utilized to sell calls, and the DAI pool to sell puts. 

However, the concept of separate pools to buy and sell options is being phased out for a more efficient alternative.

Hegic Options (1)
Source: Hegic

Hegic’s options are more expensive than competitors like Read More