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Deposit WETH in exchange for ncETH and earn protocol fees. Learn more.
Why would I provide liquidity to the vault?
Liquidity providers deposit liquidity into the vault as option sellers and use NFT options to generate income or revenue.
The vault serves as the counterparty to all trades made on the platform:
When traders win (positive PnL), their profits will be paid by the vault.
When traders lose (negative PnL), their losses (premiums) will be obtained by the vault.
The vault automatically provides market-making services through an AMM model, helping LPs earn options premiums.
How do I deposit funds?
Deposit WETH into the vault in exchange for ncETH, an ERC-20 token representing your ownership in the vault.
Browse to "Earn" page, jump into the "Deposit" tab, enter the amount of WETH you would like to provide, check out the ncETH amount you will receive and click the "Deposit" button. Note that your received ncETH amount depends on the ncETH price.
Please be aware, you can't immediately withdraw your assets within 72 hours and a new deposit will reset the lock time. Withdrawal incurs a fee of 0.3%.
Stakers receive 90% premiums from each option written on the platform in exchange for serving as the counterparty to all trades. ncETH accumulates these premiums in real-time.
How can I withdraw my funds?
Burn your ncETH in exchange for WETH.
Browse to "Earn" page, jump into the "Withdraw" tab, enter the amount of ncETH you would like to redeem, check out the WETH amount you will receive and click the "Withdraw" button. Note that an additional approval transaction will be required when you redeem your ncETH.
Please note that you will only be able to withdraw funds when the amount of available WETH in the Vault is sufficient, and you can only withdraw up to 50% of the available WETH in the Vault at one time unless the withdrawal amount is less than 1 ETH.
Available WETH refers to funds not used by current open positions.
Please be aware, you can't immediately withdraw your assets within 72 hours and a new deposit will reset the lock time. Withdrawal incurs a fee of 0.3%.
How do I claim the locked ncETH?
You don't have to claim the locked ncETH manually. Your ncETH will be automatically unlocked after 72 hours. You can check out your ncETH locked amount and when they will be unlocked in the "Locked" section on the "Earn" page.
How much have I earned?
Your ncETH represents the ownership of the WETH asset in the vault. It follows an exchange rate model (similar to Compound's cTokens) where the price of ncETH to WETH changes in real-time.
When the price of ncETH rises above the price at which you deposited your funds, your earnings will be positive; otherwise, it will be negative.
You can check out your stats in the "Your Stats" section on the "Earn" page.
How does the vault manage the risks?
The protocol aims for the ncETH vault to be close to delta-neutral, reducing PNL fluctuations for LPs and aiming to ensure that returns are driven by market making.
There are several ways to hedge the potential risks:
Position restriction: the WETH deposited determines available options positions. 95% is collateral, while 5% is reserved for withdrawals. Each NFT collection has a weight to control positions in the vault. Call/put proportions can also be adjusted based on market conditions.
Limited payout: the vault has limited payout for call options buyers due to unlimited risks for option sellers. This means that the vault cannot pay for any option profits resulting from a spot price increase exceeding 100% of the strike price. To compensate traders the protocol will adjust down the premium for buying call options.
Tuned premium: the options pricing module will also consider the position of the vault, delta and PnL of each NFT collection and make corresponding adjustments to produce fair prices, decreasing the risks of the vault.
Backstop pool: NFTCall Surge creates an backstop pool to deal with certain special situations, such as one-sided market conditions. If the vault incurs losses, the backstop pool will compensate for LP losses. The sources of funding for the backstop pool include trader's exercise fees and LP withdrawal fees.
Learn more about how the vault hedges the risks.
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