🧑🌾PokPok Protocol Mechanics
Last updated
Last updated
We know that options are not widely understood, and even those with the theoretical knowledge of option pricing may find trading in these markets daunting. In essence, option trading requires not only a correct view of the direction of the market but, equally important is the correct velocity at which market prices will move.
This is exactly why we have created the PokPok protocol, which aims to make options investments palatable and easily understood by all. In addition to pioneering the PAYG model for options, education via gamification and entertainment via fun games are at the core of what we wish to achieve.
Being PokPok’s main mechanic, Chicken NFTs (Poks) are the in-game pets that can generate profits, golden eggs, and more. They are backed by PAYG Options, lowering the entry point and minimizing risk for first-time investors. Purchasing the PAYG option is represented by minting a chicken NFT, with a percentage of the premium being funded upfront.
Users can mint Chicken NFTs at the hatchery, and represents the users opening an options position. The hatchery will provide users a quote based on the option type (ETH or BTC, call or put), duration, and payment plan.
When minting a chicken NFT, users have to pick a direction of an underlying asset (e.g. ETH). They are required to pay a certain percentage of the chicken's initial value (premium) as a downpayment and can service the rest of the premium through the duration of the option (chicken in the coop). This represents our PAYG model.
If your call turns out right on harvest day, you will be handsomely rewarded, provided you keep your chicken alive. If your call turns out wrong, the chicken will be diseased and instead be burnt for a small amount of $PEGG. While the chicken is in the coop, you may choose to stop feeding your chicken by defaulting on the payment plan and let it starve if you no longer think that the option will be profitable by harvest day.
On harvest day, when the chicken reaches maturity, the current price is compared to the strike price of the option. The chicken will be healthy if the option is profitable. In rare cases when the % delta between current price and strike price is small, the premium paid for the option may be higher than the eventual value resulting in a net loss.
Healthy chickens can be immediately harvested to receive its value in ETH. Harvesting a chicken represents taking profit from the options position. After harvesting a chicken NFT, the NFT is burnt permanently.
Unique to PokPok, healthy chickens can also be staked in the farm to lay golden eggs ($PEGG). $PEGG is a rewards token that will have utility gradually introduced. Only healthy chickens can be staked for Golden Eggs. Users would have to evaluate whether it would be worth accumulating healthy chickens for farming Golden Eggs or harvesting them and rolling profits into creating a larger number of healthy chickens (trading more options).
On the other hand, diseased chickens are unprofitable and have zero ETH value. They can, however, be burned to return a small amount of $PEGG tokens.
