Hegic

Hegic (HEGIC) is an on-chain peer-to-pool options trading protocol and cryptocurrency that is built on the Ethereum blockchain.^[1]^[2]

The protocol was first released on February 20, 2020, to abstract away the complexities of options trading, allowing users to seamlessly use it daily.^[20]^[21]

Background

Hegic is an options trading platform that allows users to buy put and call options on Ethereum and Wrapped Bitcoin (WBTC). It was founded by an anonymous programming whiz who goes by 0MOLLY WINTERMUT3. Hegic is completely non-custodial, does not have any form of KYC, easily integrates with other DeFi (Decentralized Finance) products, and lets Liquidity Providers (LPs) participate on the platform.^[3] The firm's beta mainnet was launched in early October 2020 under the name 'Hegic v888.' This version allowed users to earn rewards on their staked tokens. Additionally, users were also granted access to call and put options for both Ethereum and Wrapped Bitcoin. ^[4]
The Hegic ETH pool is non-custodial, and the liquidity providers can earn a premium in ETH. All of the deposited ETH in this pool is used for selling ETH call options, and holders of these options can swap their DAI for ETH at the strike price after they expire. In exchange, the one who purchases the option pays a premium. This premium is distributed to liquidity providers on a pro-rata basis when the option expires within two days or up to four weeks.^[18]^[19]

HEGIC Token

Hegic's protocol has its native token with the ticker symbol $HEGIC which was launched on September 9th, 2020. Holders receive liquidity mining and utilization rewards and can participate in staking and earn Wrapped Bitcoin (WBTC) or Ethereum.^[5]^[6] Holders can also participate in governance. ^[7]

Token Distribution

The token has a total fixed supply of 3,012,009,888 HEGIC, and 1,204,809,000 HEGIC in liquidity mining and utilization rewards. The token's fixed supply is allocated as follows:

20% (602,402,000 HEGIC) for early contributors.
10% (301,200,988 HEGIC) for HEGIC development fund.
40% (1,204,809,000 HEGIC) for liquidity M&U rewards.
25% (753,001,000 HEGIC) for the bonding curve contract.
5% (150,596,900 HEGIC) for the Balancer pool. ^[8]

80% (963,847,200) of rewards are allocated to Liquidity Providers (LPs) and the remaining 20% (240,961) go towards holders. Tokens are distributed every week and are proportionally distributed to LPs who provide WBTC and ETH pools. ^[9]

Options Trading

Hegic is most known for its options trading services, where users can trade non-custodial options. The platform offers fixed prices and the unlimited upside of options contracts. Users can choose any strike price, and exercise at the moment they desire. Exercising a position is guaranteed by the liquidity that is locked onto an options contract. By connecting one's wallet, users can enter their option type, size, strike price, and time for which they want to hold this position. Using WalletConnect, users can even execute trades from their mobile devices, thanks to the firm's mobile-compatible interfaces.^[10]^[11]

Users can trade call options for Ethereum through the platform. By providing assets to Hegic's liquidity pools, users can earn premiums. Premiums that are collected from call options buyers are accordingly distributed to liquidity providers. LPs who provide ETH to the pool receive writeETH tokens (ERC-20) that can be converted to ETH. ^[12]

Users can also sell put options to earn DAI. By providing DAI to the liquidity pool, they can earn premiums. Similar to selling call options, premiums that are collected from those who purchase put options are accordingly distributed to LPs, who are given writeDAI (ERC20) that can also be converted into DAI. ^[13]