Whiteheart.finance, a hedging agreement based on the decentralized options platform Hegic, has opened up a new DeFi track, using options to provide protection for users of decentralized trading platforms. This agreement will purchase every transaction on the platform A hedging option equal to the amount of the transaction to ensure that the dollar value of the encrypted asset purchase will not be affected by the price drop within 14 days. Whiteheart.finance will be launched on the test mainnet in February 2021. The following will introduce the agreement based on the official website and its white paper.
1. The user will use the Whiteheart.finance interactive page in the same way as Uniswap.
2. Every time you buy an ETH or WBTC hedge contract through Whiteheart.finance, the agreement will automatically protect the user's ETH or WBTC value with an equivalent put option.
As shown in the figure, if the price is lower than the purchase price in the next 14 days. Users will be able to exercise the hedging contract and get the difference between the exercise price and the market price at the time of exercise.
3. This means that using Whiteheart.finance to trade ETH or WBTC, in theory, users will be protected from any loss in USD within 14 days.
4. If the price falls, the user can execute the hedged contract and get the dollar difference between the buying price and the current price.
It is worth noting that once the user executes the option before the end date of the option, subsequent price fluctuations will no longer be protected.
5. The price difference after executing the contract will be sent to the Ethereum address of the transaction.
Token model
The token fundraising was completed by a private group of 233 people organized by Hegic founder Molly Wintermute in the cross-platform instant messaging tool Keybase. After IBCO is completed, the initial price of WHITE is 1 WHITE = 1.71 ETH, which is approximately US$1,077 when it landed on Uniswap. At the same time, the total number of WHITE tokens is 8888. The project team stated that they will not sell the team's tokens before the mainnet goes live. According to the official Twitter, 88 WHITE will be distributed to private group members who have participated in IBCO and will not sell tokens before the mainnet launch in 2021.
In terms of value capture of tokens, according to the white paper, WHITE token holders can get 30% of the Whiteheart.finance protocol fee, and the rest, 30% will be distributed to liquidity providers, and 20% will be distributed to HEGIC’s staking lot. 20% goes to Hegic liquidity provider.
to sum up
Automatically adding an option insurance to each transaction is undoubtedly an effective service, and it also brings more transaction volume and handling fee sharing to the underlying protocol Hegic, but Whiteheart.finance is undoubtedly not suitable for heavy chain trading users Yes, because every transaction has to pay an option fee that is higher than the cost of the gas fee, which will be a huge expense for heavy users. At the same time, multiple transactions will also result in the actual holding of put options higher than the market value of funds. At the same time, since the project has just released tokens, some details have not yet been released and are open for discussion.
On the whole, if Whiteheart.finance is regarded as the traffic entrance for on-chain transactions, users can purchase sufficient ETH or WBTC from Whiteheart before they trade on massive decentralized platforms, and obtain corresponding put options as a guarantee. , Would be a good choice. At the same time, if Whiteheart can add leverage to it, so that users can "renew" with a small amount of funds at any time after 14 days, it will also provide Whiteheart with more possibilities.
Reference reading:
Whiteheart.finance official website