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:

strikePrice=spotPrice×discountPercentagestrikePrice = spotPrice × discountPercentage

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:

expiry=currentDate+ndaysexpiry = currentDate + n days

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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