Hegic, What’s the Magic?

Business Model

Hegic’s model is peer-to-peer, and it has simplified the option purchasing and writing procedure. For buyers, one can choose a few parameters, put/call, lot size, strike price, and 5 choices of holding period ranging from 1 day to a maximum of 4 weeks. Price of the option is arbitrarily determined by the formula premium = sqrt(period) * IV * strike / price (for put, and conversely for call). IV is implied volatility, which is feed from an oracle.

Staking Returns

For investors who believe in the Hegic’s business model, its platform token HEGIC is available and HEGIC can be staked to receive the 1% settlement fee of options. Fees are collected in wBTC or ETH. From Oct to now, a total of $2.58m fees have been collected.

Token Emission and Mining Rewards

HEGIC has mining rewards for option buyers and writers. Reference can be made here: https://github.com/jmonteer/hegic-resources/blob/main/docs/Hegic%20FAQ.md#options-on-hegic (Jmonteer is not the anonymous founder but joined the project as a developer recently.) As of now:

  • Rewards will be released on a daily basis in a linear fashion (i.e. up to 1,650,000 HEGIC per day)
  • 80% of daily rewards (1,320,000) will be distributed to LPs in proportion to the liquidity they provide. This is split evenly (660,000 HEGIC per Pool) between the wBTC Pool and the ETH Pool.
  • Up to 20% of daily rewards (330,000) will be distributed to Options purchasers relative to their position size and duration (please refer to the ‘How many rewards do I receive?’ sub-section below for more detail).
  • 3% will be used in IBCO, its initial offering
  • 22% will be used to provide liquidity in the official website (a Bancor-like protocol for buying and selling HEGIC at a linearly progressive rate)
  • 5% will be allocated to provide liquidity to a DEX liquidity pool
  • 40% will be distributed as rewards to Hegic Protocol users (option holders and liquidity providers)
  • 10% will be allocated to the Hegic Development Fund. This amount is subject to linear vesting (read below) among 48 months after IBCO end date (12/09/2020 19:00:00 UTC)
  • 20% will be allocated to reward Early Contributors (read below). This amount is subject to linear vesting among 24 months after IBCO end date (12/09/2020 19:00:00 UTC)

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