Premia Blue: A Future-proof DeFi Options Exchange

Are you ready for the ultimate DeFi options experience, anon?

March 14, 2023

Are you ready for the ultimate DeFi options experience, anon?

Our devs have pulled all-nighters while our researchers have worked tirelessly to bring you an upgrade that will blow your mind. Say hello to permissionless pool creation, concentrated liquidity, an orderbook, and margin — a true lovechild between Uniswap v3 and Deribit.

Welcome to Premia v3 — a comprehensive, user-friendly and modular options DEX created to reach critical scale in DeFi!

With these changes, we’re catering to the needs of options noobs, pros and even institutional capital.

Buckle up, as it’s gonna be a long one. Starting with a broad overview, join us on the journey of introducing the changes from Premia v2 to Premia v3. Let’s go!

Starting with the inception of Premia v1, our goal has been to create publicly accessible DeFi options markets.

That’s exactly what we achieved with Premia v2 — a truly decentralized and publicly accessible options exchange.

Plenty of room for innovation has appeared over time, however — LPs have had to assume risk across a range of strikes and expiries, while traders have at times had to deal with illiquid markets.

With Premia v3, our goal is to bridge the gaps of v2 while creating a rock-solid foundation for a future-proof DeFi options platform.

Market Orders & Limit Orders

V3 will offer a basic options trading experience similar to that of Premia v2 with additional functionality.

Users can choose to buy or sell European-style calls and puts while picking the strike price, expiration, and size. They will then receive multiple price quotes inside the orderbook from liquidity pools, strategy vaults, and the RFQ network.

Additionally, users will be able to place limit orders to buy or sell options at their desired price. Limit orders are routed via the RFQ network, so users will have to sign a message instead of a transaction to accept orders.

Smart Concentrated Liquidity

With great inspiration taken from Uniswap v3, liquidity pools in Premia v3 will utilize concentrated liquidity.

Essentially, this means that LPs get to choose a range of prices (premiums) that their liquidity will be utilized within.

Additionally, we’ve implemented a feature that automatically “flips” the concentrated liquidity range order as the price for an option travels in and out of the LP’s range. This results in lower risk for LPs, while generating more yield through trading fees.

Strategy Vaults

Premia v3 will feature set-and-forget automated strategy vaults.

Vaults will be the main alternative to LPs who don’t want to actively manage their positions. With vaults, beginner LPs can generate more stable and predictable yields as opposed to simply providing liquidity into a pool.

Additionally, vaults can be built for a variety of different purposes — Delta-hedging and lending margin capital to name a few.

Margin Trading

Traders in Premia v3 will be able to borrow assets against collateral to leverage their active positions. This enables users to sell options which much lower initial capital requirements, improving capital efficiency across the exhange.

The amount that can be borrowed for trading in Premia v3’s margin will be based on a risk profile determined by the option traded and spot asset volatility.

Permissionless Pool Creation

In Premia v3, any LP can create any type of option pool with parameters of their choosing (underlying token, strike price, expiration etc,) provided they have enough liquidity to bootstrap the pool.

Depending on their demand and liquidity, these pools may or may not be hosted on Premia’s front-end app. However, anyone will always be able to permissionlessly interact with them via their respective smart contract.

So, if there’s demand for a pool but we don’t have the bandwidth for creating it, hands-on users will now be able to do it themselves!

New Features of Premia v3

To give you a sense of scale, here’s a short list of all the new features and changes we’ll be implementing, including the ones mentioned earlier:

  • Custom Parameters For LPs

  • Concentrated Liquidity Range Orders

  • Smart Liquidity Management

  • Advanced Trading UI

  • Permissionless Pool Creation

  • Aggregated Orderbook

  • Strategy Vaults

  • Margin Trading

  • Pro-rated Liquidity Utilization

  • Modular & Composable Architecture

  • European Options

  • RFQ Network

Premia v3 Rollout

Arbitrum has established itself as the home of Ethereum Layer 2 DeFi.

So naturally, we felt it best to launch v3 as an Arbitrum-exclusive product — at least for now.

However, we have aspirations of an omnichain future for Premia. A future where Premia v3 functions as a chain-agnostic protocol, allowing anyone from any chain to utilize the liquidity of any chain with no barrier for entry.

But, that’s still quite far away. So, as for Premia’s other supported chains (Optimism, Mainnet, and Fantom), v2 will keep being maintained for the foreseeable future.

Questions About Premia v3?

Stay tuned for articles explaining the intricacies of Premia v3!

It’s a lot to digest, so if you have any questions about Premia v3 or Premia in general, don’t hesitate to hop into our Discord and ask!

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