DIB CDS

Description

The DIB CDS contracts work as a binary option and pay out to the buyer only if the price of the underlying asset trades below a certain threshold (trigger price) at expiration of the contract. The payout is binary, which means that the buyer of the contract receives either a full payout or no payout. The seller has a full margin requirement, but receives the premium from the buyer at creation of the contract.

If at maturity the price of the underlying asset is trading above the trigger price, the buyer will not receive a payout and seller receives back his margin. In this case, buyer will lose his premium to the seller. If at maturity the price of the underlying asset is trading below the trigger price, the buyer of the contract will receive a full payout. The seller loses his margin, but received a premium at creation of the contract. Users can choose from the most popular stablecoins or cryptocurrencies for premium and margin payments. The standard size of a CDS contract is 1, but creating multiple contracts with one order is possible. The maximum profit is always the margin that is put up by the seller of the contract. In any case, the seller receives the premium from buyer.

To settle the contract after expiration, the user has to withdraw his payout from the contract to his wallet himself, or allow a third party to do this for him, by sending a 'withdraw' message to the blockchain. If price-data to settle the contract with has not been fetched yet, user will have to fetch the data in a separate transaction after which the withdrawal from the contract can be calculated. If the data has not been able to be fetched after 2 weeks, the seller of the contract can withdraw his margin.

DIB CDS-contracts are perfect to hedge tail-risks, earn extra passive income or speculate and open up many new investment opportunities.

Product specifications

Contract Details

CDS Style

DIB Binary option

Expiry date and time

18:00 UTC: 1 July 2019, 1 October 2019, 1 January 2020

Expiry periods

CDS Contracts are made available 9 months before their expiration

Underlying assets

Size

1 of the underlying asset

Trigger prices

If underlying asset is traded above $50; $20

If underlying asset is traded above $100; $40

If underlying asset is traded above $200; $80

If underlying asset is traded above $400; $160

etc.

Binary payout

Margin requirements

Margin currencies

Premium payment frequency

Once at creation of the contract, directly received by seller

Premium currencies

Trading hours

24/7

Settlement fee

...%

Trading fees

...%

Oracle solution

Data source(s) for settlement

.....

Computation logic

Emergency trigger

After 2 weeks of no data fetching

OracleID

.....

SyntheticID

Examples

1. You buy a CDS contract on the price of ETH/USD with a trigger price of $50 and a binary payout of $75. The premium you pay is 15 DAI and the margin put up by the seller is 75 DAI. The contract will be settled according to the traded price of ETH/USD on Binance.

If at maturity the price of ETH trades below $50, you can withdraw 75 DAI from the contract. The seller of the contract will not be able to withdraw any DAI from the contract. He lost his margin, but received the 15 DAI premium at creation of the contract. You made a total profit of 60 DAI, and the seller of the contract made a total loss of 60 DAI.

If at maturity the price of ETH trades above $50, you cannot withdraw any DAI from the contract. The seller withdraws 75 DAI from the contract that that he put up as a margin at creation of the contract. He also received the premium of 15 DAI at creation of the contract. 2. You sell a CDS contract on the price of ETH/USD with a trigger price of $50 and a binary payout of $75. The margin you have to put up is 75 DAI, and directly you receive a premium of 15 DAI. The contract will be settled according to the price of ETH/USD on Binance.

If at maturity the price of ETH trades below $50, you lose your 75 DAI margin but you received a premium of 15 at the start. Your totall loss will be 60 DAI. The buyer of the contract can withdraw the 75 DAI from the contract, but already paid a premium of 15 DAI at the creation of the contract. His total profit will be 60 DAI.

If at maturity the price of ETH trades above $50, you can withdraw your margin and you received the buyers premium at the start. Your total profit will be 15 DAI. The buyer of the contract will not be able to withdraw any payout from the contract, and he will lose his premium of 15 DAI.