What are Primitive Options?
The Primitive protocol can be used by anyone to deploy an Option smart contract. The Option contract controls the tokenization of long and short options, collateral management, and parameterization of terms. It also has the business logic to manage the minting, exercising, redemption, and closure of option tokens at a low-level.
There are two tokens which represent a full Primitive Option: The long option token and short option token. The long option token can be burned along with the strike asset payment to release the underlying collateral (exercising). The short option token is a bundled short option + collateral token, which has a claim on either the strike assets (if exercised) or the underlying assets (if expired and not exercised).
Anyone can use the Registry contract to deploy new options, but only protocol-endorsed option markets are tradeable from this interface.
We support an ever-expanding list of underlying assets, and currently use DAI as the strike asset.
Although governance controls the release of new options, option strikes are usually out-of-the-money upon deployment.
Governance currently prefers to deploy new options with a expiration of Friday at 8:00:00 UTC.
American options with manual exercising and physical settlement. Options must be manually exercised, which requires action on behalf of the user before expiry.
Call options are settled in the underlying asset. Put options are settled in the strike asset.
There is a 1 multiplier for calls, and a (1 / strike price) multiplier for puts.
No. For each 1 call option, 1 underlying token must be provided as collateral. For each 1 put option, 1 DAI must be provided as collateral.
No fees are taken from the Primitive Protocol. There is a 0.30% fee per swap for using Uniswap.
New market proposals are submitted via Snapshot on Wednesdays before a series expires on Friday.
Voting power is determined by the balance of LP tokens in the series which expires on the closest Friday.
