I have USDC and want to buy price insurance on a token.
Conditional agreements allow you to purchase insurance on a token to lock in a floor price. To do this, you create a bid to buy a contract (the insurance request) that someone else fulfills and sells to you.
Example 1
Example: James wants to makes sure he can sell his 1,000 UNI tokens for at least $12 dollars over the next 6 months. Today, UNI is at $15 dollars but dropping in price.
I want the right to sell my 1,000 UNI tokens for a minimum of $12 each anytime I choose in the next 6 months. If UNI goes to $1 dollar, I still want the right to sell it for $12. If you fill this insurance request, I will pay you $1,000 USDC today.
In this example, three things can happen
1) UNI drops below $12 dollars. Let's say it goes to $5 dollars. You active your insurance and are able to sell your 100 UNI for $12 each. You earn $12,000 USD - $1k for the insurance. You walk away with $11k when everyone else has $5k.
2) UNI does not drop below $12 dollars over the next 6 months. You never have to use your insurance, but also don't lose much value with your initial position.
To make this happen, Hedgey protocol incorporates traditional financial options and repackages them specifically for the DeFi space. To make this specific strategy happen, we use Buy Put ASK To make your own insurance request, go to step 2b.
Last modified 2mo ago
Copy link