Cega V1.5: Pure Options Vaults

Cega
4 min readDec 1, 2022

Summary

  • New Cega v1.5 vaults eliminate bond component for all users, begins trading on Dec 1
  • Same trading strategies with same downside protection levels and underlying assets
  • Knock-out barriers removed to improve liquidity distribution and effect better pricing
  • Current ultra-conservative vaults’ expected APY will be low; users seeking higher yields and maintaining conservatism should see the new Cega “Starboard” vault
  • Users who want to reallocate USDC to different Cega vaults need to queue withdrawals before Nov 30 @ 3pm UTC(final cutoff) and redeposit before Dec 1 @ 11am UTC

Overview

Over the last two weeks we spoke with many users in our community. After FTX/Alameda declared bankruptcy which left hundreds of millions of user funds/loans unpaid, it was quite apparent that the current environment is immature and not safe enough for undercollateralized lending via crypto centralized financial institutions.

Cega’s vaults were a combination of option positions with bond elements, which generated a high yield and protected users from market impact through using exotic options. We listened to your feedback and have worked hard to evolve Cega’s products to address the concern regarding lending/credit risk. Today we’re excited to announce Cega v1.5 vaults. Going forward, all Cega vault trades will have no bond component starting with the first vault trade that executes next Thursday Dec 1, 2022. All existing funds in Cega vaults rolling over as well as all new deposits into Cega vaults will be trading the no bond component product. We are very excited to be able to deliver this strong benefit to customers and are also proud to continue delivering on Cega’s mission of creating safer products for DeFi.

What are Pure Options Vaults and what’s changing?

The biggest change between Cega v1 and v1.5 is the elimination of bond component. Previously, part of the user funds were sent to market makers during the 27 day trade and returned by market makers upon options expiry — this was the bond/note-like aspect of the fixed coupon note. Now in v1.5, user deposits will not be sent to market makers but remain within the Cega program. After 27 days when the option is settled, market makers pay the APY (assuming normal vault expiry without knock-in event) and 100% of the APY comes from the options premium.

We’ve detailed the updates in a table below for ease of understanding.

Are APYs changing?

Yes. Cega v1.5 APYs are good but will be generally lower than v1 because APYs are now 100% options premium with 0% lending interest / time-value-of-money. Previously APYs were a combination of options premium and lending interest.

Indicative APYs for v1.5 vaults can be found below. Cega users can use this information to consider their yield generating strategies and how to shift USDC across Cega vault products to best align with their reward/risk needs. If you want to withdraw and redeposit your USDC into a different strategy before the v1.5 vaults trade next Thursday Dec 1, please see the next question below.

I’m an existing Cega user. What do I need to know or do?

Rollover/Compounding

Your current deposits will automatically rollover and begin trading in v1.5 Pure Options Vaults beginning next Thursday Dec 1, 2022. There are no changes to your vault strategy — if you are currently in the Autopilot vault, your investments will continue trading and compounding in the v1.5 Autopilot vault strategy.

Reallocating Funds to Another Vault

All users have the opportunity to withdraw their USDC and redeposit before v1.5 vaults start trading next Thursday Dec 1 at 11am UTC. Users who queue withdrawal requests now will see their withdrawals processed daily next Monday Nov 28, Tuesday Nov 29, Wednesday Nov 30 at 3pm UTC every day. This gives users ample time to shift Cega vault strategies if they wish. Remember you have until Dec 1 at 11am UTC to redeposit USDC into a different Cega vault strategy before trading commences (and then you have to wait another week before new trades begin).

I’m a new Cega user. What do I need to know or do?

Welcome! Check out our beginner’s guide here to know what you need to try Cega and which vault product to best meet your needs: https://cegafi.medium.com/the-0-to-1-guide-to-cega-4586f163f652

Final thoughts

We’re so excited to keep innovating and evolving Cega products to deliver value to users! Please continue to follow us on Twitter for updates @cega_fi and join our Discord for the latest updates (www.discord.gg/cega).

We are also proud of how the Cega team handled the FTX/Alameda crisis in a strong way that demonstrates we always put our users first and approach risk management responsibly.

Thank you for your continued support in Cega, the leader in DeFi derivatives and exotic options structured products.

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Cega

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