Premia & The ERC-1155 Multi-Token Standard

While Premia was exploring ways to implement our vision, ERC-20 and ERC-721 standards unfortunately were not flexible enough for our needs. Luckily, we have extensive knowledge of the ERC-1155 token standard & we are happy to share the reasons we built our launch features around this standard below.

ERC20 — Single Smart Contract per Token
ERC721 — Single Smart Contract that Mints One-Of-A-Kind NFTs

Secondary Marketplace Needs

To Create a Fungible/Liquid Secondary Market for Options Contracts the ERC1155 Standard was best fit for purpose.

More Information Here: https://eips.ethereum.org/EIPS/eip-1155

Traditionally used for transferable & fungible game assets and artwork, ERC1155 allows for a single smart contract to mint a multitude of tokens with various levels of specifications. It allows for many unique tokens (options in our case) to be created from the same smart contract, however allow for each contract to hold its own unique parameters/identifications that are tailored to the distinct options contract.

Pseudo Securitization

Premia utilizes ERC1155 for the securitization of covered options contracts where the token collateral is locked up with the smart contract until either expiration, exercise, or early cancellation (if not sold). The Premia Options Minter was constructed to be able to write Options for any Token Denominated in either DAI/WETH/WBTC. At Launch we will have whitelisted many Tokens selected amongst the well-known DeFi Protocols written against the DAI denominator.

By using the ERC1155 Token Standard we can verify that each option minted is uniform to all other like options of its kind i.e. maintain the same expiration/strike price and can be exercised for a like amount of of the underlying asset as deemed within the specifications of the options contract.

To Address the lack of divisibility that the ERC1155 standard inherently holds, we have created a simple mathematical log function that maintains a low barrier to entry in writing options contracts that is set at the Token Level.

For Example:

Options Written for WBTC/DAI will have Strike Price Increments of $100 DAI in Lots of 0.001 WBTC per Contract. (~$6 Per Contract)

Options Written for WETH/DAI will have Strike Price Increments of $10 DAI in Lots of 0.01 WETH per Contract. (~$24 Per Contract)

Options Written for AAVE/DAI will have Strike Price Increments of $1 DAI in Lots of 0.1 AAVE per Contract. (~$7.7 Per Contract)

Options Written for LINK/DAI will have Strike Price Increments of $0.10 DAI in Lots of 1 LINK per Contract. (~$11 Per Contract)

Options Written for CRV/DAI will have Strike Price Increments of $0.01 DAI in Lots of 10 CRV per Contract. (~$4.6 Per Contract)

As you can see Contract Values maintain a standard pricing range so that accounts of all sizes can participate, whereas in traditional markets all contracts are sold in lots of 100 shares per contract.

Transactional Gas Cost Reduction

The ERC1155’s inherent nature allows for multiple contracts to be written, transferred, traded, exercised, etc in one transaction, saving on gas costs and allowing for quality of life improvements for all platform users.

Another benefit of the ERC1155 standard is that it allows for the minting of new contract types (as long as they fit within the standard specifications) without the need to deploy any additional code or smart contracts. The first contract will cost ~300k in gas to store variables in EVM Storage, with all concurrent options created costing ~100k gas per transaction. We believe this to be the best approach for end users in terms of usability and reduction in transactional gas costs.

ERC1155 allows users to approve all Premia made options contracts via a single Approve All transaction if desired, so that as users continue to utilize the platform they are not subject to approval transactions for each new contract you may buy/trade/exercise, which can be burdensome and costly with other protocols.

External Marketplace Support

Premia will be providing a marketplace at launch to trade these options, however because our options contracts adhere to the ERC1155 standard they can also be sold on other marketplaces that support ERC1155 such as OpenSea. Although not a priority at launch — our tokens metadata can be easily retrieved so that the external Storefronts can gather necessary details of the options contract to display on their site. (Our options contract specifications are held within the Smart Contract itself which other secondary marketplaces need to be calibrated to retrieve, thus we will be providing JSON files that they can utilize to retrieve this information easily)

Thank you!

We will look to continue providing regular updates on the Premia Platform as the launch date of Mid-January approaches!

Please join our Discord if you have any additional question!
Discord: http://discord.gg/xun5EWJFhH

All details outlined herein are subject to change prior to launch of the protocol.