Hegic Stake & Cover Pool Mechanics Recap April 2022

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Hegic Stake & Cover Pool Mechanics Recap April 2022

The new version of Hegic on Arbitrum L2, Hegic Hardcore, was released on 2/22/2022. The total trading volume has exceeded $31,000,000 since then with 497 options and 1 click option strategies acquired by 177 unique addresses.

Hegic HardCore allows you to trade ETH ATM/OTM calls and puts, as well as an array of one-click options strategies, such as Straddles, Strangles, Strips, Straps, Bull Call Spreads and Bear Put Spreads.

Visit //www.hegic.co/

Hegic Stake & Cover Pool Mechanics Recap

In Hegic HardCore, new liquidity aggregation and utilization model was introduced. There is no division into liquidity providers and stakers / premiums and settlement fees on Hegic HardCore.

Instead of many different liquidity pools and staking contracts, there is only one Hegic Stake & Cover pool. Staked $HEGIC tokens are utilized to cover the protocol’s net losses on selling options/strategies and earn net profits on all expired options/strategies.

The Hegic Stake & Cover (S&C) Pool participants receive 100% of net premiums earned on selling ATM/OTM options (both ETH and WBTC calls & puts) and options strategies (all of them) on Hegic HardCore. The net premiums earned (or losses accrued) are distributed pro-rata among all of the Hegic S&C Pool participants.

The net premium is a difference between the total premiums received from all options/strategies buyers and the total profits paid out to options/strategies holders who exercised their contracts in-the-money.

The Hegic S&C Pool participants receive the net P&L in Arbitrum USDC tokens and can claim them once the active options/strategies expire out-of-the-money and the premiums are unlocked, thus, becoming claimable.

In the Hegic HardCore Beta Release announcement article, it was stated that the net P&L settlement is conducted monthly: the net difference in Arbitrum USDC tokens between the monthly total premiums received and the total profit earned by options/strategies buyers is sent to the Hegic Stake & Cover Pool from the Hegic Operational Treasury.

Since the new version was just released, it took a little longer for net premiums to accumulate. That’s why the first distribution is happening today, a little less than two months since the launch of Hegic HardCore.

$234,094 Earned in Net Premiums in <2 Months

Hegic V8888 staking participants who staked their $HEGIC tokens before 2/22/22 and didn’t withdraw them until 4/20/22, received hHEGIC, which represents a share of the net P&L of Hegic Stake & Cover.

Selling 497 options and strategies has led to accumulating +$234,094 in net premiums earned in <2 months since the launch of Hegic HardCore. These net premiums have just been distributed.

In order to check your hHEGIC balance and claimable Arbitrum USDC Net Premiums, visit //www.hegic.co/ → Launch Hegic → Connect to Arbitrum Network → Stake & Cover.

hHEGIC Holders Risk Disclosure

At launch, Hegic V8888 stakers won’t be participating in covering potential losses on selling options/strategies on Hegic HardCore. Instead, they will receive synthetic hHEGIC tokens that will be used as a proxy for participating in the Hegic Stake & Cover Pool.

When after a monthly settlement net profits will be accumulated on the Hegic Stake & Cover pool, hHEGIC holders will be able to claim pro-rata Arbitrum USDC tokens. If after a monthly settlement net losses will accrue, a pro-rata share of hHEGIC tokens will be collected to cover the monthly loss.

There are two potential outcomes for the Hegic V8888 staking participants who will be participating in Hegic HardCore: losing a share of hHEGIC (synthetic tokens, not their $HEGIC staked on V8888) or earning Arbitrum USDC tokens (real, claimable tokens).

All risks associated with options/strategies selling efficiency and potential losses during the Hegic HardCore beta testing phase will be borne by the Hegic Development Fund. The initial liquidity for selling options and strategies will also be deposited by HDF as the only options/strategies seller during the Hegic Hardcore beta testing phase.

Join Hegic Discord → 🌁#hardcore-beta and feel free to share your feedback or ask any questions about the Hegic Hardcore Beta.

Thanks for your patience and involvement,

Molly Wintermute
4/20/22

Attention: Live in Beta

DISCLAIMER: Hegic / Hegic HardCore is an experimental open source protocol in beta built on Ethereum. Use it at your own risk. If you will lose any money using Hegic / Hegic HardCore, you won’t be compensated or refunded. Only use Hegic / Hegic HardCore with money that you can 100% afford to lose. You can lose 100% of your funds provided to the Hegic liquidity pools. Hacks, security bugs and economic abuses can happen because of an experimental nature of beta version of the protocol. You won’t be compensated in case of any losses related to the Hegic protocol. If you do not agree with any part of this disclaimer never use the Hegic protocol / Hegic HardCore.

ACQUIRING/HOLDING/OWNING/USING HEGIC TOKENS DOES NOT PROVIDE/GUARANTEE YOU OR ANYBODY ELSE DIVIDENDS OR ANY KIND OF RETURNS. ACQUIRING HEGIC TOKENS DOES NOT PROVIDE YOU WITH ANY RIGHTS IN ANY JURISDICTION. HEGIC TOKEN IS NOT A CURRENCY BUT AN INTERNET DIGITAL UNIT OF NON-FINANCIAL UTILITY THAT CAN BE USED SOLELY IN THE HEGIC PROTOCOL. THE HEGIC PROTOCOL SHALL NOT BE LIABLE TO YOU OR ANYBODY ELSE FOR ANY DAMAGE OR(AND) LOSSES IN ANY CONNECTIONS WITH HEGIC TOKENS. IF YOU DO NOT AGREE WITH ANY PART OF THIS DISCLAIMER NEVER ACQUIRE/HOLD/OWN/USE HEGIC.

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