For The 1337 Devs

Smart Contract Overview: Delta

The Delta contract, an ERC20 token, is the core of the Hedge protocol. It enables users to mint, manage, and redeem options fully onchain with collateral management.

State Variables

• morpheus: An array of oracle addresses to fetch asset prices.

• IDs: An array of IDs corresponding to the oracles.

• collateralToken: Address of the ERC20 token used as collateral.

• expiry: Expiry time of the option contract.

• strikePrice: The price at which option can be exercised.

• priceDec: Decimals places for the price.

• currentPrice: Current price of the asset fetched from the oracle.

• timestamp: Latest timestamp of the price update.

• collateral: Mapping of address to collateral amount.

• name: Name of the token.

• symbol: Symbol of the token.

Events

• Initialized: Emitted when the contract is initialized.

• Minted: Emitted when new options are minted.

• Delta: Emitted when profit is calculated.

• Unlocked: Emitted when collateral is unlocked.

• Redeemed: Emitted when options are redeemed.

• PriceUpdated: Emitted when asset price is updated.

Core Functions

Initialization

function init(
    string memory name_,
    string memory symbol_,
    address[] memory _morpheus,
    address _collateralToken,
    uint _expiry,
    uint _strikePrice,
    string memory APIendpoint,
    string memory APIendpointPath,
    uint256 dec
) public payable

Initialize the contract with specified parameters.

• Inputs:

  • name_: Name of the option token.

  • symbol_: Symbol of the option token.

  • _morpheus: Addresses of oracles.

  • _collateralToken: Address of the collateral token.

  • _expiry: Expiry time of options.

  • _strikePrice: Strike price for the option.

  • APIendpoint: API endpoint for fetching price.

  • APIendpointPath: Specific path for price data in the API response.

  • dec: Decimal places for price.

• Revert: The collateral token must not have been set previously.

• Effects: Sets state variables and requests feed from oracles to begin setup.

Minting Options

function mint(address to, uint amount) public

Allows a user to mint options by depositing collateral.

• Inputs:

  • to: Address receiving the minted options.

  • amount: Amount of options to be minted.

• Revert: Must be called before the expiry time.

• Effects: Transfers collateral, updates collateral mapping, and mints the new options and assigns them to the to address.

Calculating Profit

function getDelta() public view returns (uint profit)

Calculate the profit obtainable if the option is exercised for 1 option token.

• Outputs:

  • profit: The difference between strike price and current price, if profitable.

Unlocking Collateral

function unlock(uint amount) public

Allows the holder of an option thats also minter to unlock collateral by burning options. Allows for liquidity, minimization of opportunity cost risk.

• Inputs:

  • amount: Amount of collateral to unlock.

• Effects: Reduces collateral, burns options for corresponding amount, and transfers collateral back to the user.

Redeeming Options

function redeem() public

The redeem function allows a holder of the options to redeem their options after the expiry date. The amount of collateral returned depends on the strike price, the current price, and the leverage. Also refunds collateral back to minters for strike - delta.

• Requirements: Must be called after the expiry time.

• Effects: Calculates payoff, burns options, and transfers payoff and/or collateral back to the holder.

Updating Price

function updatePrice() external returns (uint value)

Update the current price of the asset using oracle.

• Outputs:

  • value: The updated price.

• Requirements: Must be called before expiry and reach a quorum.

• Effects: Updates currentPrice and timestamp state variables.

• updateFeeds: Allow updating of oracle feeds.

• sort: Sorts an array of integers.

• quickSort: A helper function for sorting.

• decimals: Overrides ERC20 decimals to return collateral token decimals.

Updating Oracle Feeds

function updateFeeds() external payable

The updateFeeds function does not take any explicit inputs and must be sent Ether to operate, which is then distributed amongst the oracles in morpheus as bounties. The function cycles through each oracle in the morpheus array, assigning each oracle a task with an equal share of the total sent Ether as a bounty, ensuring that the oracles are incentivized to return the requested data. This is crucial for obtaining fresh and accurate data for the updatePrice function.

Effects:

• Iterates through the morpheus array, distributing the sent value (msg.value) evenly as bounties across the oracles.

• Invokes the supportFeeds function on each oracle, supplying the requisite ID and bounty.

Conclusion

Hedge allows the decentralized creation and management of PUT options, providing a mechanism for hedging assets and earning premiums in the DeFi space.

Disclaimer

Engage with smart contracts and platforms understanding the associated risks.x