Premia v3: What Changes For Traders?

If you were looking for an overview of Premia v3 specifically directed at users of the platform, look no further!

If you were looking for an overview of Premia v3 specifically directed at users of the platform, look no further!

By unleashing a unique hybrid of an AMM and an orderbook, multiple price quote sources, an advanced trading UI, and European options, Premia v3 is set to transform DeFi options.

It’s time to go in-depth with the changes and features we’ve implemented in Premia v3 that are most relevant to active traders on our platform.

Without further ado, let’s dive in — here’s everything that you, an avid options trader, absolutely need to know about Premia v3, starting with the AMM & Orderbook hybrid design!

Automated Market Maker and Orderbook Hybrid

We’ve built Premia v3 with a unique hybrid design, combining the advantages of an Automated Market Maker (AMM) and an orderbook.

This approach addresses the limitations of traditional AMMs by incorporating the dynamic flexibility and precise pricing of orderbooks. By doing so, we’ve optimized liquidity management and enhanced the overall trading experience for Premia’s users.

Additionally, combining the pool-to-peer architecture of Premia v2 with a highly efficient orderbook allows v3 to cater to a wide variety of users. Whales and normal users alike get to enjoy maximum efficiency and optimal pricing with multiple quote sources for the orderbook.

Price Quotes

To ensure that traders receive the most accurate and reliable pricing, the Premia v3 trading UI provides multiple price quotes from a variety of 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.

  1. Liquidity Pools: In Premia v3, 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 v3 can execute easily accessible strategies and split returns pro-rata across depositors. Vaults that are designed to trade options can then be aggregated within the orderbook. Vaults such as Knox Vaults, and the C-level Vaults (Premia V2 pools — but better), for example!

  3. RFQ Network: The RFQ network further enhances the pricing and trade execution of v3. Traders can submit a request for a specific option contract, and in return, they may receive customized quotes from an off-chain messaging layer of market makers and liquidity providers.

  4. Limit Order Book: 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.

Change From American to European Options

We’ve made the strategic decision to transition from American to European options.

This shift comes with numerous net positives for Premia v3 and our users, streamlining the trading process while reducing risks and enhancing pricing!

  1. Lower Transaction Costs: European options are significantly cheaper to implement on-chain, due to only requiring a single settlement value to be accounted for in each option pool. This means traders and LPs can enjoy much lower gas prices per transaction.

  2. More Accurate Pricing: The fixed expiration date of European options eliminates the need for the excess complexity that is otherwise needed to account for early exercise scenarios. This allows market makers to price options more effectively for assets with constantly changing yield opportunities.

  3. Limited Exercise Advantage: In practice, only a small minority of users ever utilized the ability to exercise American options before their expiration date. With this switch we are simplifying the overall experience without sacrificing significant functionality.

Enough said, the pros most definitely outweigh the cons.

The shift to European options enhances the user experience with lower costs, streamlined trading, and the most accurate on-chain pricing possible, with the only drawback being the removal of early exercising.

Advanced Trading UI

We’ve designed Premia v3’s trading UI to fill the gaps of v2.

In short, we wanted to provide our users with a wide range of features and customization options based on their preference and experience level.

All without leaving out anything of essence such as miniscule details or the liquidity of certain expiration dates.

We’ve kept the essential options parameters of v2 while also introducing new features such as an integrated price chart and an orderbook view for traders used to a more traditional options trading interface. Additionally, users can now set both buy orders and sell orders inside the same page.

Premia v3 Advanced Orderbook View (WIP)

Premia v3 Basic Trading View (WIP)

The advanced UI provides a plethora of customization options, including tools for managing risk and setting limit orders.

Premia v3’s advanced trading UI is a significant upgrade from the previous version, providing users with everything v2 was missing.

Join a Better DeFi Options Future With Premia v3!

Premia v3’s AMM-orderbook hybrid structure offers never before seen benefits for DeFi options traders!

I don’t mean to brag, but we do believe we’ve optimized liquidity management, option pricing, trade execution, and the user experience — all in one nifty platform.

In Premia v3, traders will be able to make better decisions, trade with better prices, and utilize their liquidity to the max.

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