Hello! BlockTalkers & Blockchain Enthusiastic!
We recently hosted an AMA with Hedget, on September 3rd at 1.30 PM UTC. Many of you might have participated or many of not. But we make sure no one missed out from the knowledge shared by Malcolm Lerider, co-founder of Hedget & Serge Lubkin,Co-founder of Hedget. So here we are up with the AMA transcript, for those who missed the live session, this blog post will be a saver & feeder of knowledge for them.
Malcolm Lerider: Hi everyone, I’m Malcolm, co-founder of Hedget. I ran the R&D at NEO back in 2017 and worked on global blockchain projects at PwC. I have been doing business development and community building at Chromia after I left PwC, as I see Chromia being the most flexible and usable blockchain from R&D and business perspectives. We now have a very exciting project to prove what Chromia actually can do, and it’s called Hedget.
Serge Lubkin: Hi guys! My name is Serge Lubkin. I was Chromia marketing lead during IEO and further exchanges listing. I built relations with communities and influencers. I’m MSc in Economics, but all my life, I’ve been doing marketing for various projects. Also, I’m an experienced derivatives trader, traded a lot on BitMEX/Binance/Deribit, mostly perpetual swaps and futures, and also options. Now, I am a co-founding Hedget with Malcolm.
Introduction Questions Asked By BlockTalks
Q1. Could you please introduce Hedget to our community in layman’s term?
Ans — Hedget is a “Gadget for Hedging,” a platform for P2P decentralized options. You pay the smallest possible premium to secure your positions against unexpected price movements, seeing what we did the last few days, it’s pretty nice to have products like that.
In an industry where many take advantage of “gambling behavior”, we want to offer the exact opposite — a possibility to remove risk in a decentralized manner. So our values are aligned around eliminating risk in crypto. It’s like basic insurance for very volatile crypto markets.
Q2. What are the advantages of Hedget to other alternatives in the Blockchain field?
Ans — 1. We are building it for users; most tokens go to options writers, and token stakers govern the protocol
2. Flexibility. Chromia is in simple terms a relational database wrapped in a blockchain. All benefits of blockchain, with the possibility to develop as complex applications as centralized ones.
3. Team and network effect. We have gathered people with diverse and specific know-how to develop this project
Q3. What are the major milestones Hedget achieved so far & what are in the future pipeline?
Ans — Hedget is currently in the KYC process and the token auction starts next week. Anyone who would like to join should go through the KYC process at www.hedget.com
This is a novel way of releasing a token and we think it is a more fair and transparent way. An overview can be found on Medium, and more details are to be released soon.
We are also wrapping up the prototype, which will be a first look into Hedget protocol. The options platform itself is expected to launch on Ethereum Testnet in about two months.
We believe that the crypto options market will have a similar boom as leveraged trading had a few years back. BitMex rode the wave, did it well, and became market leaders. If we are right about options markets starting to boost, then we are going to grab this opportunity as early participants to become market leaders. We want Hedget to have largest market share among all decentralized option platforms.
Questions Asked on Twitter For Hedget team!
Q1. Do Hedget have any plans to partner with big lending protocols such as Maker Dao’s Collateral Debt Positions (CDP) or dYdX to try to expand a security feature against user position liquidation?
Ans — I can only say that Hedget focus in terms of partnerships is on liquidity providers, lending protocols, leveraged trading platforms, and other DeFi protocols. We will announce when we have partnerships signed.
Q2. What are the ways is Hedget generating profits/revenue to maintain your project and what is its revenue model ? How can it make benefit win-win to both investors and your project ?
Ans — HGET is needed as stake to write options on Hedget. It is also needed to stake for participation in governance and for taker fees.
Option writers will be rewarded from liquidity mining, which is 50% of the total token supply. The presale is already more than enough funds to launch the platform, then we will switch to a DAO model where governance stakes hopefully can get part of the fees on the platform; we are still working on the details for how that structure may looks like.
Q3. In your white paper you comment that “initially, protocol will support European style options”. What exactly does Hedget mean by this concept and what are the practical implications?
Ans — It means that options can only be exercised on the expiry date. American style options allow options to be exercised at any arbitrary time before expiry date. We choose to start with European style as these are less expensive than American style, and also make it easier for us to aggregate liquidity.
Q4. What is the difference between Cash Settlement and Physical Settlement ? What happen when ETH call options are exercised? Options will be priced in stablecoins such as USDC, DAI, BUSD.
Does Hedget plan to add another Stablecoins in the future?
Ans — When ETH call option is exercised:
1. Physically, option buyer needs to put collateral to buy ETH at the strike price
2. In cash, buyer receives the difference between strike price and current price in stablecoin
Options will be priced in stablecoins and we will use only the most popular ones to aggregate liquidity.
Both physical and cash settlement will be available at Hedget.
Q5. There are many project comes and goes who says they are going to help traders to not get liquidated. Due to lag yesterday I got liquidated on my trade. How Hedget is solving this problem collaboratively?
Ans — Your funds on Hedget (and anywhere else) cannot be liquidated if you don’t use margin. Option products naturally don’t require margin from a buyer side.
If you use margin make sure you have a hedging strategy. If you have one — mind options it’s the best solution to click a “pause” button on volatile market.
We will build API’s and probably also automatic hedging strategies so that users that are less experienced with the risks of trading can pay just a small premium to have an “insurance” against unexpected price movements.
Questions Asked by our BlockTalks Community Members during live Session for the Hedget team!
Q1. Will CHR tokens need to be hold on Hedget? Will CHR token be used?
Ans — Hedget protocol is using CHR tokens to host on Chromia, but it’s paid from the protocol and not from users. Fees on Hedget will use HGET token.
CHR tokens can be used to participate in HGET auction, but from user perspective, that’s it. The CHR tokens from auction will likely be enough to host Hedget for many years, but it’s possible that the future DAO will incorporate CHR in one way or another to automatically cover for Chromia nodes.
Q2. Will Hedget Foundation only focus on Hedget development or are you also developing other projects simultaneously?
Ans — The main goal of Foundation behind Hedget is to develop Hedget as an open source p2p decentralized protocol.
In the beginning we have only weekly options/European style, but when we have enough liquidity we will offer much more products, such as American style options, VIX instruments, strangles, straddles, and fully custom options.
Q3. Is Hedget the only decentralised platform for options trading? If yes, how was this achieved?. If no, how is it different from other decentralised platforms for options trading?
Ans — There are a handful of other projects just starting, and most of them are directly on Ethereum without layer 2. It’s a bit problematic when it comes to trading, as fees and transaction speed is a limitation, especially when everyone are going fomo on food tokens. Hedget is using Ethereum only for collateral, and the option trading is on Chromia as layer 2. This means that options can be traded as normal even when there are too many sushi, hotdog, springrolls and whatnot.
Q4. Hedget as a ETH Layer 2 project based on Chromia Relational chain, does it mean that every HGET holders can participate Hedget network governance? How to operate specifically?
Ans — You need to convert HGET ERC20 to Chromia based governance HGET, then you will be able to vote for different changes on the protocol. We will share the details soon.
Q5. What are the benefits of using Hedget?
What will Hedget users get?
Ans — UI and usability in general, like in Centralized exchange with all properties of Decentralized exchange, you control your funds, relying ultimately only on Ethereum smart contract, also open source and transparent. Best from both worlds.
Also liquidity mining and fee schedule that rebates option writers.
Q6. Yeild farming is a new trending so HGET have any plan to yeild farming system development?
Ans — It will be liquidity mining, our goal is to save yield farmers from bankruptcies.
Q7. What problems you guys are facing at the Moment?
What are you doing to tackle with it?
Ans — We are doing very well with both technical and business development, maybe a little too well, as we find that the biggest restriction at the moment is available time. We have started to expand the team and recruitment will pick up in the coming weeks.
Q8. Why the $Hedget protocol
Build a decentralized options trading platform?
Why not traditional?
Ans — A. DeFi space needs decentralized platform and you cannot build anything decentralized on top of centralized solution
B. For attracting liquidity- our decentralized pool will ensure we have enough of it
Q9. HGET has a unique model that encompasses Staking/Lending/Governance as well as offering cross-chain interoperabilty so how does your team maintain all of them at their best?
Ans — The HGET token is the native utility and governance token of the Hedget platform. It will be issued on the Ethereum network as an ERC-20 contract and will have representation on a Chromia sidechain.
Before the platform is launched with real assets there will be a Testnet platform (hosted on both Chromia and Ethereum testnets) to participate on which users need to stake HGET to access. Users will trade funds that have little to no real value, but the best performing traders will be rewarded automatically by Hedget protocol with HGET tokens upon mainnet release.
When the platform migrates to Mainnet, HGET will be used to prevent spamming of orders which can lead to API overloads and order book manipulation. HGET tokens will need to be staked to interact with the platform. Staking requirements will increase as the monetary value and frequency of a user’s interactions increase.
As the platform is further developed, a DAO will be established and HGET tokens will be used to determine transaction fees, reserve requirements, and general functions and features of the platform.
Lastly, the HGET token will be used as a security measure and reputation engine in the future when margined options are implemented. Options writers who wish to offer options without providing 1:1 collateral will need to stake HGET tokens which will be used to purchase fully collateralized option in case of capital insufficiencies.
Q10. What critical problems do you see occurring in the blockchain industry nowadays?
How does Hedget aim to solve these problems?
Ans — FOMO and dumps. This is exactly why we need options, so that users can safeguard themselves against sudden price movements.
Q11. How does HEDGET works in order to protect user investment from unexpected price movement?
Do user need to provide Private key to hetget company in order to get hetget full service?
Ans — By buying options users buy “insurance” by fixing the price at certain moment in time paying small premium for doing that
Hedget is non custodial, meaning users control their private keys themselves.
Q12. Can you share about the niche market, and target markets and the broader market that HGET aims to?
Ans — Primary target markets are hedge funds, lending protocols, DeFi protocols, and other platforms where there is high risk of sudden price movements and/or liquidations. This is where options are needed. We want to implement a solution that is understandable not only to experienced traders, but also for retail investors.
Q13. Do you have a plan to BURN or Buyback $HGET tokens to increase it’s value?Can you tell us something about your Vision and target that Hedget is focusing most until end of this year?
Ans — Small amount from each trade on Hedget will go to locked for 2 years reserve, and then DAO will decide what to do with them. Our focus is on getting massive liquidity to the platform also striking partnerships with protocols and exchanges.
Q14. Due to the rise in Ethereum’s transaction fees, has the team thought about switching to another blockchain? Which cross-chain solutions HEDGET will use? Why HEDGET choose to build on Ethereum first?
Ans — Ethereum is still number one in terms of digital assets, so it is a good place to start. It is only used for collateral and settlement, and expiry is once per week, so there shouldn’t be too much time sensitive transactions. As we already are building on Chromia as layer 2, this doesn’t affect Hedget too much.
That being said, Hedget will very likely support assets on other blockchains in addition to Ethereum. There is a big demand to support native BTC, and there are a handful of other digital asset blockchains that are being considered. HGET tokens will actually be able to control the development direction by voting on the next chain to support.