oPREON
What are option calls?
Within the context of Preon, option call PREON or $oPREON is an illiquid token earned upon depositing in a Preon Farm. It can be redeemed for $PREON at a discount within a timeframe, which upon expiry is forfeited if not redeemed. Redeemal is done $ETH at a variable discount set by Preon Policy.
Other than redemption, $oPREON can be zapped into $vePREON on a 1:1 ratio.
oPREON is designed in the style of American Call Options, which are redeemable within the expiry period, after which it is forfeited if not redeemed.
How to earn $oPREON?
$oPREON is only accessible by depositing liquidity into a Preon Farm or Stability Pool. It is impossible to buy $oPREON or transfer it.
How are $oPREON options formulated?
The formula is very simple:
The discount is variable & set by Preon Policy. The discount cannot be changed once locked-in, ensuring that redemption is at the discount the user agreed to.
Expiry is also set at 2 weeks. Any call that isn't exercised within 2 weeks is forfeited. To make sure you are on time, keep in mind the following formula:
Example:
Bob supplies $STAR - $WETH Uni v3 LP on Preon & earns $100 worth of $oPREON within 2 weeks. For sake of example, the discount is set to 20%.
To realize his rewards, Bob redeems his $oPREON for $80 worth of $ETH.
The $ETH is sent to the Treasury as POL.
Bob can now sell his $PREON for a $20 profit.
OR
Bob wants to lock his $oPREON for $vePREON to earn on protocol fees.
Bob zaps his $oPREON by providing 20% of the emission value in $wETH to create an 80/20 $PREON / $wETH BPT
If Bob does not exercise his call option within 2 weeks, his $oPREON rewards are forfeited to the Preon Treasury.
What are the benefits of call options over liquidity mining?
Increased protocol loyalty
Incentivized lockup
Decreased sell pressure
Creation of Protocol Owned Liquidity
Amplified sustainability
Implementation details
$oPREON is an omnichain ERC-20 that is untradeable. $oPREON derives its properties such as strike price, expiry period & redemption on a contract level.
Due to its illiquid nature, $oPREON is also non-transferable.
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