Fees
APR = Put Option Premium
Last updated
APR = Put Option Premium
Last updated
The premium is a borrower's accrued fee. We use the Black-Scholes Formula for this calculation.
Below are the calculations for approximate APRs users would pay based on their loan-to-value ratio (risk).
15%
~1%
30%
~16.5%
50%
~76%
Below are the inputs we currently use for the calculation. You can find all of our deployed contracts here, look for "PremiumPricer."
S (Current NFT Average Floor)
Average NFT Floor Price
K (Strike or Borrow Amount)
Your Borrowed Amount
σ (Volatility)
225%
r (risk-free rate)
8%
t (time to expiration)
1 month
All the complexities of the put options are entirely abstracted from the user. They see a standard APR for their loan.
The Black Scholes Pricing Model creates a system that incentivizes healthier borrowing, in other words, those who have low Loan-To-Value loans pay significantly less than high Loan-To-Value. This safeguards our protocol from onboarding too much risk.
