How it works

The instrument: a perpetual option#

What trades here is a perpetual option: a call or a put that never expires on a fixed date. It is American, so it is never worth less than what it would pay if exercised right now.

Its price has two parts. Intrinsic is the contract's own part — what the option would pay today, set by the strike and the mark, nothing more. Extrinsic is the market's part — what people will pay on top of that for the chance it pays more later. Intrinsic is never charged for holding; extrinsic is.

Funding is the roll#

A perpetual option still ages. Its time value wears away at a rate, and keeping the claim whole means buying back what wore away. Funding is the cost of that roll: the leg's extrinsic, read at the oracle's relevant side and at the leg's own decay, times the leg's rate per year, for the time that has passed.

The oracle's relevant side is its bid for a long leg and its ask for a short leg (the oracle is explained in section 5). The holder bears the cost of the roll and the other side of the claim receives it: a long pays, a short receives. The size of the position never changes, and funding alone never liquidates anything — it is one more number in the account's equity.

Funding builds up second by second. The venue's keeper settles it on a regular cadence, and any close or liquidation first settles what has built up to that moment, so a leg is never closed with funding owing. Time when an asset's prices were frozen is not charged (see section 10). The venue keeps 10 % of every funding payment; the receiver gets the other 90 % (section 6).

Decay is a mean life in months, and any length is allowed#

Where a listed option has an expiry date, this one has a decay: its mean life, in months. The leg's rate per year is 12 divided by its months, so a 3-month decay rolls four times as fast as a 12-month one: it is cheaper to buy and dearer to hold. A decay is a continuous number, shown with up to two decimals (0.25 mo, 2.5 mo, 11.6 mo). You can type any length inside the quoting range below, and the ledger records the rate exactly, not a rounded month.

The DECAY box on the OPTION ticket and the DECAY stepper on the chart toolbar are one number shown in two places. On the chart, − and + step through the expiries the listed market has. If you type a decay outside the range, the ticket says so by name and nothing opens. If only makers with fixed decays are standing, a typed decay snaps to the nearest one they quote, and says so.

The quoting range: calibrated by the listed market, never shrunk by it#

Makers quote a continuous surface, not just the listed expiries. The listed market calibrates it; it never limits it. The range of decays runs from a very short one (one hour) up to the longest decay listed in the last 120 days plus a 25 % margin, so when a listed expiry rolls off the end the range does not jump. Between and beyond the listed expiries the price comes from the same straight-line surface (section 5), and a leg priced beyond the longest listing is an extension, not a listed quote. The chart still draws the market at listed expiries, which is display only.

Strikes are read as a % from the mark#

A strike is fixed in dollars when you open. Afterwards the screen reads it as a percentage from the current mark, so +20 % follows the market rather than the calendar. The ticket takes either a % or a dollar figure and converts both ways. A strike has to sit inside the strikes the listed market covers at that decay: outside them there is nothing real to price from, and the ticket says "no maker quotes a strike beyond the listed range" and shows the range.

TRANSACT has three tickets#

OPTION opens one call or put, bought or sold. You type a quantity in coin and a strike; the ticket shows the PRICE in dollars first (the fraction of spot second), one PREMIUM / MARGIN row, one FEE row and a signed FUNDING / YR. It opens into your OPTIONS account with no perp behind it. A bought option costs its premium and nothing more; a sold one is margined in the account's one margin test (section 3).

PERP is CREATE PERP, where you choose PROTECT and a perp opens with the option structure that goes with it, as one request — also in section 3. EARN is the maker side: you post a curve instead of a ticket (section 4).

Every trade is at the front#

Makers quote; the front is the best quote on each side at each strike and decay across the makers standing. An open, a close and a liquidation all trade at the front — never at a model price and never at the mark. The front, and which quotes may set it, is in section 5.

If your size is bigger than the makers at that strike can fill, you get one line — "only X BTC available at this strike right now" — and TRANSACT stays disabled until the size fits. A swap's two legs each cross the market once, so its total slippage is 1 − (1 − s₁)(1 − s₂), never the sum.

Where it runs#

The ledger, the front and the margin for sold options all run in contracts on the Elysium testnet. Perps and the money itself stay on HyperCore: you fund an account from your own HyperCore wallet, and what you withdraw goes back to it. A service on Railway (the keeper) reads the chain, pushes the oracle and the marks in, settles funding, tests accounts against their margin and relays what you sign; it sets no price and clears no trade. The chip in the header names the ledger version and the last block read, and appears only while the service can reach the chain. Section 9 has the whole picture.

What it does not show you#

How much room the makers have left. This is a request-for-quote venue: publishing aggregate capacity would publish where the book is thin. The only capacity number ever printed is the answer to a size you already asked for. Makers are anonymous too — you see yourself and the aggregate, never a name.