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Mechanics

How an option moves from offer to settlement.

When an offer is accepted​

When a buyer accepts a writer's offer, three things happen together:

  • The buyer pays the premium.
  • The writer receives 95% of the premium, credited to their available balance immediately.
  • An equivalent amount of the writer's BTC is locked as collateral until expiry.

The strike, set as a percentage when the offer was created, is converted to a USD value at this moment using the current BTC/USD price. It is then fixed for the life of the option.

Settlement​

Settlement runs automatically on a fixed schedule. The protocol checks for expired options, fetches the BTC/USD price at expiry from the on-chain oracle, and pays out each side.

A note on Bitcoin custody​

When you deposit, your BTC goes into custody held under threshold ECDSA. Internet Computer nodes sign Bitcoin transactions collectively, and no single node holds the key. The internal on-chain representation of that BTC is called ckBTC. From your perspective the balance behaves like native BTC: you deposit BTC and you withdraw BTC.

Verify on-chain: ckBTC minter, ckBTC ledger. Background: ckBTC docs.