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.
Water-based Poks are of a defensive nature, where users give up some profit potential in exchange for a lower cost of rearing. They are good to trade a range-bound market. Maximum profit is capped at either 5% or 10% increase from the strike price, depending on your choices.
Water-based Poks require a full premium upfront, but this will be cheaper than PAYG options because your profit potential is limited. There is no need to feed your Water-based Pok daily at the coop, you just need to wait until maturity day!
