Premia Blue: Next-Gen DeFi Options

For days that felt like weeks and months that felt like years, a question has plagued our minds… wen v3?

The time for wondering and the need for asking is over, Anon, because it’s finally here — go check it out at app.premia.blue!

Welcome to Premia Blue (v3) — a non-custodial options exchange with fully customizable range orders, permissionless pools, options vaults, OTC liquidity, and a limit-orderbook.

All this with a sophisticated meta-economics model and referral system to accompany it.

This article is a thorough overview of the core features and product offerings of Premia Blue:

• Base Exchange Layer

• Strategy Vaults & Depot Layer

• OTC Quote Network & Messaging Layer

• Meta-Economics and vxPREMIA

• Referral System

Starting with concentrated liquidity and range orders inside the base exchange layer, let’s dive in!

Base Exchange Layer Overview

Alright frens, let’s put it bluntly — Premia Blue is a DeFi options exchange that has it all.

The base options exchange layer is packed with every single feature that an options trader or liquidity provider might wish for, such as:

• Concentrated Liquidity

  • Enables liquidity providers (LPs) to set positions in specific option pools with set price ranges.

  • Optimizes fee collection and capital efficiency.

• Range Orders

  • Includes various order types, each with their specific functions.

  • Fully customizable price range and options parameters.

  • One-sided exposure that flips automatically to gather more fees.

• Partial Collateralization & Margin

  • Introduces a margin framework for partial collateralization of specific payouts.

  • Increases liquidity, better asset pricing, and no counter-party risks.

  • Margin ETA - November

• Vaults & OTC Liquidity

  • Addresses illiquidity and pricing across the volatility surface

  • Price quotes are routed directly to the Premia Blue app

• Permissionless European-Style Options Markets

  • Integrated markets for any asset pair with an on-chain spot price oracle.

Along with the strategy vaults, Premia Blue offers a nifty set of smart contracts (The Vault Depot) for partners to deploy automated strategies atop Premia.

Enough said, Premia Blue creates a two-sided marketplace for buying and selling DeFi options. No, not just a vault, but a proper peer-to-peer options exchange — an efficient one at that!

DeFi Options Orderbook

Premia Blue ensures deep liquidity and accurate pricing by providing multiple price quotes from various sources.

This diversification of price feeds not only helps to mitigate the risk of price manipulation, but also offers traders a broader perspective on the market.

Quotes from liquidity pools, strategy vaults, and the RFQ network are aggregated directly into the exchange layer trading UI.

1. Liquidity Pools: In Premia Blue, liquidity pools offer traders a quote based on the size of the trade and the current state of the market. Liquidity providers can place concentrated range orders on the buy (bid) or sell (ask) side, similar to concentrated liquidity AMMs for spot markets.

2. Strategy Vaults: Vaults in Premia Blue can execute easily accessible strategies and split returns across depositors. Vaults that are designed to trade options can then be aggregated within the orderbook.

3. RFQ Network: The RFQ network further enhances pricing and trade execution by providing OTC liquidity and limit orders. Traders can submit a request for a specific option contract, and in return, they can receive customized quotes.

4. Limit-Orderbook: Along with the RFQ network, users can receive quotes from limit orders placed on the Arbitrum Nova orderbook. Anyone can place a signed order, which will be verified and validated before aggregation.

Price quotes from the RFQ-network, vaults, and liquidity pools all come together in the Premia Blue UI to create a non-custodial trading experience similar to that of a CLOB — or in other words, a centralized exchange.

Permissionless Liquidity Pools & Customization

Ever dreamt of trading or market-making options for a memecoin? Anyone can create a pool on Premia Blue for any option on any token.

LPs can fully customize the underlying token, strike price, and expiration date of the option they wish to market-make. If a pool doesn’t exist for the option, the LP can seed the liquidity to create one!

• Underlying token (ETH, BTC, any ERC-20 with a valid price oracle)

• Option type (call or put)

• Strike price (fixed to round numbers)

• Expiration date (up to 1 year)

• Initial exposure (long or short)

In summary, LPs on Premia Blue have full freedom over their exposure.

Let’s get in-depth with Premia Blue’s Smart Range Orders and how they optimize fees generated for LPs by automatically “flipping” the exposure of the price range!

Concentrated Liquidity & Smart Range Orders

In a concentrated liquidity system, capital is assigned to a price range to maximize utilization and generated fees.

LPs on Premia Blue can set “range orders” that define the upper and lower bounds of the premiums their capital market-makes.

Range orders on Premia Blue are one-sided; this means that by choosing “long”, liquidity is utilized to underwrite long positions on that option. And by choosing “short”, short positions are underwritten instead.

Although Premia Blue’s range orders provide one-sided exposure, they “flip” automatically. What does this mean?

As the market price moves through an LP’s price range, the LP will collect trading fees and the LP’s exposure will be updated. If the market price moves back down, the LP will collect more trading fees as the LP’s exposure reverses back to its original state.

• Range orders flip exposure automatically

• Fees are collected both ways

• Increased capital efficiency and fees

• Lower risk for LPs.

It’s as simple as that! For a more in-depth and technical explanation of the LP range orders, read the docs.

Options Strategy Vaults & Depot Layer

At their core, options vaults in Premia Blue can execute easily accessible strategies and split returns across depositors.

• Vaults for Everyone

  • Designed for passive users to auto-participate in options markets.

  • Supports market-making and yield capture strategies.

  • Created by both Premia teams and third parties.

  • Utilizes standard range orders or the quote-based liquidity system.

• OTC Liquidity & Market-Makers

  • The OTC system lets vaults provide fillable option quotes, boosting liquidity and optimizing execution prices and fees.

• Broad Liquidity Provision

  • Vaults offer liquidity across the entire volatility surface, enhancing efficiency.

  • Supports a many-to-one relationship between vaults and pools.

• Seamless Integration

  • Merges with the base exchange layer to tackle liquidity challenges.

  • Offers just-in-time liquidity for both passive and active market-making.

• Volatility-Based Pricing

  • Allows institutional traders to give volatility quotes without incurring EVM gas fees.

In essence, the Vault Layer simplifies option market complexities, ensuring easy access for passive users and optimal liquidity. It's a pivotal part of PREMIA V3's efficient decentralized token options exchange.

OTC Quote Network & Messaging Layer

Premia Blue’s messaging layer or Over-the-Counter (OTC) quote system is a vital component designed to enhance liquidity and efficiency of the base exchange layer.

This is one of the main alternatives for sophisticated users to tap into the Premia Blue options exchange and create integrations with the protocol

• Liquidity Provision:

  • Vaults and market-makers can offer fillable option quotes, reducing liquidity fragmentation.

• Integration with Vaults:

  • Specific vaults utilize the OTC system to maximize liquidity and capital efficiency across the volatility surface.

• Volatility-Based Pricing:

  • Allows professional traders to give volatility quotes without the extra EVM gas fees.

• Broadened Liquidity:

  • Boosts liquidity across various strikes and maturities, optimizing execution and fees.

• Off-Chain Quote Flexibility:

  • Market-makers can offer off-chain quotes which can then be processed on the exchange.

• Programmatic Trading:

  • Accessible via the Premia Blue app, Typescript SDK, and API. Allows for integration into algorithmic trading systems. Check the Developer Center for more details.

Premia Blue’s OTC quote network integrates on-chain and off-chain actions, enhancing trading efficiency and advanced strategy implementation for different types of traders.

Meta-Economics & vxPREMIA

PREMIA can be locked to tap into the economic extracts of the Premia Blue ecosystem: revenue share, fee discount, governance, and LM gauge voting.

Premia’s dual-token model serves four main purposes:

1. Governance: vxPREMIA holders gain the right to vote on proposals affecting the platform

2. Revenue Share: vxPREMIA holders receive 80% of protocol fees denominated in USDC

3. Utility: Holding enough vxPREMIA provides discounts on trading fees

4. Incentives: The amount of LM rewards allocated to each liquidity pool is managed by vxPREMIA voters.

In Premia Blue’s economic model, protocol fees and commissions cascade into three distinct layers: base, margin, and vault.

For more details on the fee schedule and the numerous benefits Premia stakers receive, check out Premia Blue Tokenomics: vxPremia & Fee Structure or the docs.

Cumulative fees from all sources will be divided to three parties: vxPREMIA holders, Premian Republic, and the Insurance Fund.

• Staking Users receive 80% of base layer fees

• Premian Republic receives 20% of base layer fees

• Insurance Fund collects 100% of the fees from the vault and margin layers.

Referral System

With the meta-economic flywheel of Premia Blue, we’ve implemented a referral system to reward active ecosystem participants and ambassadors.

1. Find your referral link on the Profile tab inside app.premia.blue after signing in.

2. Your referral link will redirect back to app.premia.blue + a personal referral code.

3. Referred users need to open the app with your link and make a small trade to ensure they are registered as a referral.

Referring new users to the platform using your link nets you a percentage of their fees, with the amount of fees earned increasing by Tiers. Stay tuned for more details on the referral system!

For a limited time only after Premia Blue’s launch, all referrers will net 50% of all protocol fees from referred wallets!

Premia Blue is Live on Arbitrum!

Ya ready Anon? Get started trading DeFi options on Premia Blue!

Premia Blue is the first non-custodial options settlement layer with fully customizable options parameters and risk exposure.

Maximize capital efficiency, define your own risk, and optimize fees earned with Premia Blue on Arbitrum!

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