Throughout this article, we talked about what HEGIC coins are, what Hegic coins are, and how you can purchase HEGIC coins. Review and future plans for the HEGIC coin are outlined here…
Powered by liquidity pools and hedging contracts, Hegic enables peer-to-peer options trading on Ethereum.
Hegic (HEGIC) Coin Nedir?
Powered by private smart contracts and liquidity pools, Hegic is an options trading platform on the Ethereum network. This project aims to bring transparency, distrust, and an on-chain solution to the world of crypto options trading for Ethereum-based assets, such as ETH and wBTC. The platform uses a unique liquidity pool model to reward users for writing options contracts. To distribute rewards fairly among all types of platform participants, Hegic relies on its native HEGIC token, and plans to integrate community governance mechanisms in the future.
Founded in January 2020 by an unknown developer with the nickname Molly Winterminute, Hegic is an on-chain options trading protocol built on the Ethereum network. Hegic allows users to buy and sell decentralized option contracts for crypto assets using special smart contracts known as hedging contracts. Hegic’s crypto options contracts offer holders (i.e. buyers) the right to buy or sell an asset at a predetermined price (known as the strike price) and oblige writers (also known as sellers) to buy or sell an asset for a specified period of time. The Hegic model incorporates decentralized finance (DeFi) logic into crypto options trading to provide a product that offers functionality beyond traditional standards for financial derivatives.
Hegic’s innovative DeFi approach to derivatives leverages hedge contracts, which are smart contract-based analogues of traditional call or put options on assets such as ETH or wBTC. Hegic users can hedge their crypto investments to better protect the value of their crypto assets. To fund these hedge contracts and provide platform liquidity, Hegic relies on a liquidity pool mechanism similar to that found in many DEX protocols. Liquidity providers who deposit into Hegic liquidity pools facilitate the platform’s unreliable options trading and can earn rewards for doing so.
Hegic Platform Structure and Liquidity Pools
Users can join the Hegic platform primarily as buyers of hedging contracts or as authors of hedging contracts.
First, Hegic users can buy call and put options for certain Ethereum-based assets. This can be advantageous for many reasons. For example, the decision to participate in an options call can benefit your overall investment strategy or reduce some type of risk. Most traditional and crypto options trading relies on having individual owners and individual writers in a transaction. But Hegic’s liquidity pools are designed to accumulate liquidity from many liquidity providers or writers, which reduces downside risk and offers deep liquidity.
Second, those who find the potential returns of writing hedging contracts attractive enough can “write” both call and put options on the Hegic platform, allocating various assets such as wBTC or ETH to the respective liquidity pool contracts to generate returns. Hegic’s liquidity pools are not supervised, meaning that no one has access to the author’s funds other than the owners who purchased the hedge contract.
Hegic’s liquidity pool mechanism means that hedging contract writers’ assets are pooled. Therefore, downside risk is distributed among all liquidity providers. Similarly, the monetary rewards of writing a hedging contract are split among all liquidity providers. Liquidity providers earn the HEGIC LP token in proportion to their contribution to the liquidity pool, as well as a portion of the pool bonuses paid in ETH or wBTC.
Another unique feature of Hegic’s liquidity pool mechanism is that unlike traditional models that rely on individual authors, a Hegic liquidity provider can allocate funds to many hedge contracts simultaneously to diversify their liquidity allocations. This model is designed in such a way that in the long run the returns of a liquidity provider on the Hegic platform can exceed the returns of a traditional individual writer.
When hedging contracts expire, both the premium and the payout fee are generated in ETH or wBTC. The premium is paid back to the liquidity providers, while 100% of the platform’s settlement fees are distributed proportionally among all HEGIC token holders. These fees are collected and distributed quarterly. Both bonuses and settlement fee rewards are paid in ETH and wBTC, but Hegic also relies heavily on its native token, which gives its holders some unique benefits.
HEGIC Coin Nedir?
HEGIC is an ERC-20 token used primarily to distribute rewards and as the platform’s general utility token. While users can earn rewards in the form of ETH and wBTC, liquidity providers and platform users can also earn HEGIC and get special benefits by holding the token. Some of these advantages are:
- By staking at least 880,000 HEGICs, token holders can claim one of 3,000 available stake lots, qualifying them to receive an equal proportion of Hegic’s stated and quarterly swap fees in ETH and wBTC.
- Holders of a stock also receive rewards in HEGIC from tie-in curve fees.
- HEGIC token holders are entitled to a 30% discount when purchasing hedging contracts on the Hegic platform.
- Hedge contract writers who also own sufficient amounts of HEGIC tokens are eligible for priority opening of their liquidity.
- Liquidity providers earn HEGIC in addition to premiums paid in ETH and wBTC.
A fixed maximum supply of HEGIC is about three billion HEGICs, which is released on a curated schedule via a bonding curve smart contract. Users can purchase HEGIC on an exchange or directly on the mooring curve.
Hegic Platform Management via gHEGIC
Announced in April 2021, Hegic has announced plans for a staggered management launch to reward platform users and enable active members of the Hegic community to participate in platform management. The GHEGIC governance token was designed to separate the governance and utility mechanisms of the Hegic platform. gHEGIC tokens will be distributed to reward long-term platform users, HEGIC holders, liquidity providers and active members of Hegic’s Discord channel.
Holders of gHEGIC tokens will be able to participate in the community management of the Hegic platform by voting on improvement proposals that include rates, settlement fee sizes, supported assets, and other platform-specific decisions.
Hegic (HEGIC) Coin Review and Future 2022
Hegic has built an updated options-like financial tool for the Ethereum-based DeFi and cryptocurrency ecosystem. It helps spread downside risk and potential premium earnings among hedge contract writers who can pool their liquidity and provide liquidity for multiple hedge contracts simultaneously, thus making it possible to increase efficiency and diversify liquidity.
In the spirit of DeFi, Hegic provides an unsupervised, smart contract-enabled options trading platform that offers unreliable automation and on-chain negotiation. Hegic’s structure allows users to participate in crypto options trading without increased autonomy and privacy. The platform also distributes 100% of payment fees among HEGIC token holders, giving back to its user base. Instead of charging them for using Hegic, it rewards them. While initially only providing support for ETH and wBTC, Hegic plans to expand its offerings to various assets in the Ethereum ecosystem and further refine its hedging contract capabilities.
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