Premia Finance: Decentralized Financial Instrument Protocol
Premia is a decentralized financial protocol that is working to shake up traditional finance products with advanced tools and an innovative approach to finance.
The platform is a DeFi protocol for which can be used for hedging risk or speculating on the future price of popular assets.
The platform currently supports various tokens such as Ethereum and Binance Smart Chain and offers both call and put options for these asset classes.
Premia can be seen as a support tool for investors who need to hedge risk in different ways. It can also create returns from holding the protocol’s native token, and help to offset risk in a number of ways.
Premia: Main Features
Premia has three main features;
- Mint
- Stake
- Ethereum bonding curve
With the Mint feature, users can generate customized call and put options for a diversity of supported assets. The parameters for options on the platform include a strike price, expiration date, and quantity of the assets.
Stake is the Premia token which users will help its users share fees and earn a return as a result of owning the token.
The third feature is the Ethereum bonding curve. It is used as a way to buy and sell Premia by using straighten bonding curve mechanics.
While there are numerous ways to speculate on the future of token prices, the crypto options space is relatively underdeveloped. Premia is addressing this lack of development and creating professional-grade tools for a growing sector.
Premia’s Milestones So Far
The platform was launched in February of 2020 with a functional marketplace that possesses a variety of tools for writing and trading a range of ERC-20 tokens on the Ethereum blockchain.
Premia continued to develop its position by partnering with DPI (IndexCoop) to bring Premia tokens to its marketplace.
The company is also cooperating with COVER (Cover Protocol) to add their insurance to COVER’s marketplace, all within two weeks from the day the platform was officially launched.
Within the first month of its launch, Premia collected more than 100k DAI in their transaction volume and had over 300k DAI on opening interest.
Premia was officially launched on Binance Smart Chain with the support from positive news for the platform in late March.
Significantly, the platform tokens were defined as precise tokens for BSC ecosystem with the accumulation of over 50k DAI in transaction volume as well as more than 2 million DAI in open interest.
What is Happening on the Platform?
Premia’s social media account gained over 5,500 followers within a month after being established and attracted a following from significant crypto-related accounts as well as known market influencers.
Within the first week after its launch, the platform was added to different crypto markets like Blockfolio, Zerion, and Zapper. It was also successfully joined Cover’s insurance marketplace. The second week after launch, Premia was also added to SushiSwap protocol.
Premia is Unique
Premia is joining a market that is already populated by complementary platforms like Binance, Cover, Link, Uniswap, Badger, and Aave, however, the platform has a unique feature that sets it apart from other platforms in the DeFi space.
Specifically, Premia can use the ERC-1155 protocol that provides many different options for users. By using this protocol, the platform offers P2P options, easy asset selection, and custom support in the secondary market.
Via its ERC-1155 functionality, the platform will be able to provide support for any tokens in the marketplace with just a single submitted transaction.
Other protocols that use ERC-20 or ERC-721 have to generate a new contract for each new token they support – and this can lead to high costs. In addition, some protocols also require new contracts for combining tokens, a strike price, or options expiration.
A Better Way to Trade OTC/P2P
Premia offers a more cost savings model which can support users in long term.
In terms of offering P2P options, unlike platforms that provide pool to peer models to their users, Premia P2P is completely controlled by the users and will not use a pool to exercise or transfer tokens.
This means the platform’s users can trade these options totally on a P2P basis without passing through any centralized system.
Premia also takes advantage of its extreme composability feature. A deposit is held for each option until it expires, and these options payout the exact deposit input amount based on the American-style model that they follow.
Premia’s options are extremely useful and flexible, which makes the platform stand out in the marketplace.
Premia is Making its Mark
A notable feature on the platform is the ability to customize assets.
This means users are allowed to generate and trade their options of any strike price (this will be limited by increment, e.g. 0.1, 1, 10), any expiration date, and any supported tokens on their platform.
The second feature of the platform is its incentive models. Premia has preserved 30% of its total supply tokens for liquidity and then utilizing for trading incentive models.
By doing this, Premia brings both liquidity providers and long-term users to the platform.
For instance, users will be encouraged to make a liquidity deposit into the platform’s meta vaults that will add liquidity immediately to the marketplace, which results in increasing open interest while decreasing spreads.
The platform also has a secondary market that promotes P2P trading.
Basically, the platform was launched as a secondary marketplace that allows users to set up options the way they want to – and then trade them on a P2P basis if desired.
Premia’s marketplace operates based on an on-chain order book which means there will not be a centralized server that is used to track or execute users’ orders.
Getting Started on the Market
Using the Premia marketplace is easy.
- Users will begin by choosing premia mint to start writing an option.
- Then, a user can customize the chosen option and select whether they would like to “Mint on Sale” or “Mint to Wallet” option.
- If they want to keep it in their personal wallet then the “Mint to Wallet” should be selected.
- On the other hand, the option will be brought to the marketplace with the selling price that is chosen by the user if the “Mint on Sale” option is selected.
- In case the option is actually sold, the only available option will be minted at the time of executing the sale action.
- When the user chooses an option to their wallet, this can be canceled anytime to recover the underlying deposit which is held inside and the option token will be burned.
- However, if a user decides to sell their option to another user, they will not be able to cancel or burn the selected option.
- The user can cancel an option by going to premia finance or account and choose deposits, then choose “Burn to Withdraw”.
- If the users want to sell their option, they will need to go to their personal account then choose positions or deposits and choose “Trade on Marketplace” for that selected option.
- Users can go to the marketplace to find their most suitable option for purchasing by either selecting an existing sell order or set a limit purchase offer.
- Users can also choose the “Flash Exercise” option to unlock the existing profit without depositing any token.
Conclusion
As a platform, Premia is still in its early stages of growth. You can learn more about how to use the platform, or start trading options with Premia by visiting its website. There is sure to be more coming from this company – so keep an eye on Premia.
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OhNoCryptocurrency via https://www.ohnocrypto.com/ @Nicholas Say, @Khareem Sudlow