Cega Finance Uncovered

We’ve seen some misinformation about Cega circulating recently and wanted to directly address the claims because the trust and integrity of our community and protocol is critical.

A number of the accusations were rooted in a lack of understanding about our product — while we detailed the product, specs, and risks in our docs and web app, we know that better educating users is one of our core values. While we debunk some myths below we also wanted to take this chance to share more knowledge about exotic options. We continue to be excited to bring exotic options to DeFi and democratize access to a powerful, flexible financial instrument for all investors.

Also, kudos to the investigator for shining a light on real yield. As they said, “Dig deep into the source of your yield. Understand the risks you are being exposed to.” We are firm believers in real yield protocols — Cega is one of them. Don’t mask investor ROI behind inflationary tokens, emissions or undisclosed risks.

Additionally if you haven’t seen our earlier response addressing misinformation, please read it here.

TLDR Summary:

  • Cega vaults trade the “fixed coupon note” exotic option which has note (aka bond) like characteristics
  • This means users lend their capital to the note issuer who promises to return the capital plus yield interest
  • Cega does not send user deposits to a Credora Maple pool or any Maple undercollateralized lending pool
  • Cega APYs are real outputs from MM trades, not made up of yield from lending to Maple pools
  • Cega does not fake its TVL
  • Cega trades are 20% collateralized

Claim Category 1: Undercollateralized Lending

Claim: Cega lends user funds to market makers.

True. Cega vaults trade an exotic option called the “fixed coupon note”. The “note” (aka bond in traditional finance) aspect of the options product behaves like a bond because:

(1) Investors give capital (aka “principal”) to the note issuer who promises to pay yield (“interest”) periodically and return the initial investment when the note matures/expires

(2) There is a periodic yield payment (“coupon”) that is a predetermined, fixed amount

This is described in our documentation here about the bond vs. equity-like characteristics of the FCN exotic derivative vault.

Claim: Market makers are borrowing depositors funds without depositing any collateral

False. Every Cega trade with market markers is collateralized 20%. This is shared in our Cega Support Guide and also mentioned in our Discord. We also have vigilant processes in place to check counterparty credit through our partnership with Credora.

Claim: Cega is actually an undercollateralized lending protocol.

False. The underlying flow of funds resembles undercollateralized lending because the inaugural Cega exotic option was the fixed coupon note, which has a more obvious note/bond-like lending element. However the world of exotic options is vast and we’re excited to bring to market more types of exotic options with different risk/reward profiles for users.

Additionally, Cega does not send user deposits to a Credora Maple pool or any Maple pool (Maple is a undercollateralized lending protocol).

Claim: Cega is downplaying the risks of undercollateralized lending and not disclosing the risks transparently

We do our best to disclose this so we think this claim is False. The counterparty credit risk can be found on the vault page where investors go to deposit. We also openly address it in our documentation, in our Intercom support guides, in our mainnet launch medium, and in our presentations (another one). We believe Cega vaults present incredible opportunities for investors to generate safer, high yields. However it’s important for investors to understand the risks of their investment, like any type of investment for a prudent investor.

Claim Category 2: Yield

Claim: Cega yields are made up >90% from undercollateralized lending.

False. We do agree that 10% KI vaults have a larger credit element than 50% KI structures, but for the 10%KI structures we are priced at higher than a lending pool due to the bond + options combination. For the 50% KI vaults, the yield is majority from options payout.

Claim: In reality, no market maker is paying 10% APY that BTC or ETH will fall 90% in a month. It’s just straight up unrealistic.

False. All yields presented in our web app are the actual APY bid by the highest market maker in the recent weekly auction. Barriers help discount the price of an option and in a volatile environment such as this, market makers are willing to purchase a tail-end insurance.

Claim: Cega is hiding its yield makeup so they can charge ridiculous fees. Why wouldn’t a user just use uncollateralized lending [Maple Credora pool]?

False. Three Cega vaults generate 4x or more lending APY for users which far outweighs the fees. Additionally, Cega only charges the performance fee when users generate profit from their trade. Cega’s fees are in line with other option protocols, because the set-up required to hedge options positions is far more costly than credit pools. We recommend users to have a portfolio distributed across various solutions, and the positions taken with Cega and undercollateralized lending platforms are inherently different.

Claim Category 3: TVL

Claim: Cega TVL is fake (inflated, misleading). The money deposited is fake by VCs and market makers in order to bring legitimacy and trust to users.


Cega does not fake its TVL.

There are some financial institutions that both deposit into Cega vaults and also market make the product (meaning if they win the auction, they receive vault deposits for that trade). However:

(1) The only way for a financial institution to receive Cega depositors’ funds is by winning the trade auction by bidding the highest APY against other market makers. Investing in a Cega vault DOES NOT guarantee or entitle that investor to winning the weekly Cega auction, and receiving funds.

(2) Financial institutions that market make for Cega and also deposit into Cega vaults have their own rationale — as part of a portfolio play, to airdrop farm in anticipation of future token launch, or because they have different books with different mandates

Claim: It’s suspicious that a market maker that bids on your auction is the biggest depositor in your protocol.

False But Can Understand Concern. Market makers for Cega who also deposit into Cega vaults have their own rationale — as part of a portfolio play, to airdrop farm for future Cega tokens, or because they have different books with different mandates. Many top crypto market makers are also seed investors in DeFi protocols and as such have lots of different operating goals.

For the anonymous investigator, we hear your worries. That’s why Cega commits to focusing on educating our users even more through enhancing our #option-101 materials and #research content.

We are here to expand the capabilities of the DeFi ecosystem together, not to tarnish each other. If you would like to contact any Cega member, our DM is open and we are always here to listen.



Cega is building the next evolution in defi derivatives with the first protocol focused purely on exotic options.

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Cega is building the next evolution in defi derivatives with the first protocol focused purely on exotic options.