Options Liquidity Mining

Premia's Options Liquidity Mining: A Symphony of Strategy

Premia has orchestrated a novel approach to liquidity mining in the ever-evolving landscape of DeFi Primitives. Instead of the traditional token rewards, liquidity providers are now bestowed with Premia Call Options at a tantalizing 45% discount to the underlying asset's current market price.

Here's how the melody plays out:

  1. The Call of Options: Liquidity providers receive PREMIA Call Options, granting them the right (but not the obligation) to buy PREMIA at a specific price within a set timeframe.

  2. A Discounted Dance: These options are offered at a 45% discount, creating an attractive incentive for liquidity providers to participate.

  3. The Exercise Enigma: If the options are exercised, approximately 90% of the proceeds circulate to vxPREMIA staking users, while the remaining 10% is directed to the Blue Descent DAO.

  4. The Lock of Intrinsic Value: If the options are not exercised, 20% of the option's intrinsic value is locked for a year, after which it's provided to the liquidity provider's wallet.

  5. Fees and the Secondary Market: Protocol fees are collected on exercise, and taker fees are levied if the option is traded on the secondary market.

  6. Modular Mastery: This mechanism is built modularly, allowing any market to be deployed as a physically settled option.

  7. A Harmonious Balance: This innovative approach aligns the interests of liquidity providers, staking users, and the broader Premia ecosystem.

Premia's Options Liquidity Mining is like a finely composed piece of music; each note and rhythm plays a vital role in creating a harmonious balance. It's a strategic dance that benefits liquidity providers and long-term visionaries of the platform, adding a new layer of complexity and opportunity to the decentralized finance space. It's not just a change; it's a revolution in how liquidity mining is conceived and executed. 🎵

The below will be decommissioned in September 2023

To bootstrap liquidity during the growth phases of the Premia Ecosystem, liquidity mining was introduced to further incentivize liquidity providers in addition to the premiums generated through underwriting products on the Premia Platform.

The target rate was established to maintain low inflation between 0.75 and 1.00 Premia tokens emitted per block to liquidity providers. As of November 2022, this hovers around 0.905 Premia tokens per block across all supported chains.

  • Arbitrum (0.375)

  • Ethereum (0.1875)

  • Fantom (0.1875)

  • Optimism (0.155)

With the coming implementation of the Omnichain Hub Relay, this allocation will be subject for review and amendment.

This is for V2 and is subject to change in V3, which can be found here.

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