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Long Vaults

The first step in creating a 2 sided options market for altcoins
The introduction of long vaults allows users to participate in the buy side for Thetanut's short option vaults. Each long position only requires 10% collateralization from users. The options parameters of the long vaults such as the expiry, strike price, premiums, and delta correspond to the basic vault equivalent. The options premiums payable by long users correspond to the winning bid from market makers. Users would need to pay a fixed 2% APR borrowing fee to maintain their long positions.

How does it work?

The underlying infrastructure of the long vault is a lending market. When a user opens a long position, they would need to deposit their collateral which is then used to borrow up to 10x worth of long contracts. Users can view their long contracts as their current borrow position in a lending market.

Auction Phase

Premiums are paid upfront to the sellers of the basic vault, increasing the long user’s active position (as the number of long contracts borrowed has increased).

Settlement Phase

If the long vault is ITM, the option contract is exercised and the user would earn a profit. This profit is then used to repay any costs/debt incurred from maintaining the long position which is reflected by a decrease in the number of long contracts in the user's active position.
If the long vault is OTM, the option contract expires worthless and there would not be any changes in the user’s active position.
Last modified 1mo ago