Hegic is an options-like on-chain contract that gives the holders (buyer) a right to buy or sell an asset at a certain price (strike) as well as imposes the obligation on the writer (seller) to buy or sell an asset at a certain period.
It can be useful for the market participants who want to protect their assets from the price downside and for the liquidity providers who might find the returns on writing hedge contracts attractive enough to allocate some of their capital to the liquidity pool contract.
On the traditional (CBOE, CME, etc.) or crypto-assets (Deribit, FTX, etc.) options exchanges, holders and writers are individual agents (retail or institutional). It means that while trading options, their capital is exposed to independent risks and returns, and their trading results have nothing to do with the other market participants’ profits or losses.
On the seller’s (writers’) side, Hegic liquidity pool contracts accumulate liquidity from many market participants simultaneously. This approach reduces the risks of losing capital (potential downside) while providing liquidity providers with returns.
It gives the holder (buyer) a right to buy or sell an asset at a certain price (strike) as well as imposes an obligation on the writer (seller) to buy or sell an asset during a certain period. Hedge contracts can be considered as a non-custodial, trustless, and censorship-resistant alternative to option contracts.
On Hegic, liquidity providers’ funds can be distributed between many hedge contracts simultaneously. It diversifies the liquidity pool and makes capital work efficiently. The assumption is that, in the long run, liquidity providers’ returns could beat the returns of a solo options writer.
The initial implementations of Hegic will enable holders to buy put hedge contracts that will give them the right to swap ETH to DAI stablecoin at a certain price (strike) at any given moment until the expiration. Hegic uses a dynamic strike price determination approach, which influences the rate and the premium of hedge contracts. Maintenance and execution of hedge contracts do not depend on external price feeds. Liquidity pools are non-custodial.
HEGIC is an ERC20 token that is used for the distribution of 100% of the settlement fees between all the token holders and in the protocol for on-chain governance purposes. The HEGIC token combines collective fractional ownership, utility, and governance functions.
It is used for the distribution of the settlement fees between the token holders as well as in the protocol’s on-chain governance. Settlement fees that accrue on Hegic are distributed between all the HEGIC token holders every quarter. Therefore, the HEGIC token combines the collective fractional ownership, utility, and governance functions.
Who are the founders of Hegic (HEGIC)?
Hegic was created by an anonymous developer going by the name of Molly Wintermute.
What is Hegic (HEGIC) used for?
HEGIC token’s value proposition for holders is better rates for holding hedge contracts
To use the discount, holders have to hold HEGIC tokens on their ETH address that they use to activate hedge contracts. The market value of HEGIC tokens on the holder’s ETH address should be the same or higher than the strike price of the hedge contract to have a lower rate. Initial implementations of Hegic will give the HEGIC token holders a 30% discount on the rates (excluding a settlement fee).
HEGIC token’s value proposition for writers is no delay, priority unlocks of their liquidity
To have a priority for liquidity unlock, the writers have to hold HEGIC tokens on their ETH address that they use to provide liquidity to the pool. The market value of HEGIC tokens on the writer’s ETH address should be the same or higher than the liquidity provided to the pool to have a no delay, priority unlock.
HEGIC token is used in HIPs (Hegic Improvement Proposal) for governance purposes
HEGIC token holders can vote for changing hedge contract rates, settlement fee size, strike price multipliers, assets supported by hedge contracts, and more. The governance mechanism will be implemented as soon as the Hegic protocol will have traction and at least 100 monthly active holders and writers.
How is Hegic (HEGIC) unique?
Liquidity pools on Hegic are non-custodial. No one has access to writers’ funds, but the holders for whom they can be locked by the hedge contract for a certain period. The incentive for the writers to provide liquidity is earning premiums that the holders (buyers) are paying to protect their crypto assets from the price downside.
In the initial implementations of Hegic, the rate for holding a hedge contract varies from 0.5% up to 2.0% per week. Rates also depend on the hedge contracts period and strike price that each holder chooses individually.
How many Hegic (HEGIC) coins are in circulation?
HEGIC has a fixed supply of 3,012,009 HEGIC tokens, which will be unlocked within the time after the particular goals are reached by the Hegic protocol.
How is the Hegic network secured?
Shortly after Hegic was released on April 23, a bug in the code was found, and $48,000 worth of user funds were permanently locked in the project’s smart contracts.
Fortunately, Molly Wintermute had developed a loyal community, and with the support of early contributors, a new smart contract was released in May and all users were reimbursed for any funds that were lost due to the bug.
The audit for the new contract came back a month later, after which Hegic continued to add new features, and its total value locked increased to over $80 million by the end of the year, setting a record daily trading volume of $8.2 million in November.
How do I buy Hegic (HEGIC)?
The Hegic token can be used for a wide range of uses, like staking and governance.
Hegic tokens can be easily purchased by the following steps.
* Open an account with the crypto trading platform.
* Transfer the specific amount of your fiat currency to your account.
* Wait for your deposit to be confirmed and buy Hegic through your trading account.
Which Cryptocurrency Wallet Supports Hegic (HEGIC)?
The PTPWallet platform supports many cryptocurrencies simultaneously, such as Hegic (HEGIC). Because of its vast use case, it has grown to become one of the most used platforms, as it serves as an exchange and an engine to discover other cryptocurrencies. Users can easily use PTPWallet as their HEGIC wallet because it offers a simple interactive interface, making it easy for people to navigate.