JPEGX

This project combines NFT collection pool contracts with oracles providing floor prices to create an NFT options platform that is designed with maximum liquidity in mind.

NFT holders can deposit their NFTs into the specific collection pool (eg. Moonbirds) effectively writing covered calls (giving the buyer the option, but not the obligation, to buy the underlying NFT at an agreed strike price) and selling these for a premium to earn yield from option buyers.

These call options are European (only exercised at expiry) and are cash settled in ETH (meaning the writer of the options contract will pay any profit due to the holder) rather than transfer any assets unless the option writer is unwilling to pay differential.

The options are exercised by the contract on expiry. The premium is transferred to the option sellers based on their percentage of the pool. If the option expires in the money (market price > strike price) then the option sellers have a limited time to pay for the profit either as a lump sum or as a Superfluid payment stream. If they are unwilling/unable to do so the NFTs are offered at strike price to the option buyers for a limited time. If they forgo that offer then the NFTs are liquidated for ETH below market price to cover the profit. The remaining balance minus platform fees are returned to the option seller.

Smart Contract defines option details per NFT Collection and stakes NFTs. Market price is retrieved by Tellor Oracles. Smart Contract governs the option expiry and distribution of profit shares to option writers or strike to market price differential to option callers, depending on whether the option expired in-the-money or not.

To create an ongoing option coverage for NFT owner, Superfluid Constant Flow Agreement is used, providing ongoing balancing of strike to market price (again retrieved by Oracle) differential for option writers, in a single transaction. This mitigates the need for a large lump sum settlement of market price differential, optimizes the NFT owner's cashflow and ensures the NFT will be returned, even if the option expires against the NFT owner's favour. A Keeper monitors the stream, adjusting the flow rate and stream direction on an ongoing basis.

To distribute the shares of NFT pool's premiums to NFT owners, Superfluid Instant Distribution Agreement is used, to ensures gas efficient distribution of pool shares to multiple addresses.

Polygon is used as deployment for all Smart Contracts for optimal speed and gas cost.