Premia’s Volatility Surface Oracle
Enabling new, low liquidity risk markets in DeFi
Premia is excited to announce that we will be launching our Volatility Oracle through the use of Chainlink nodes, bringing our options volatility data on-chain for the entire Decentralized Finance (DeFi) market.
Through the Premia Chainlink node, we can broadcast our diverse set of volatility data on-chain for any DeFi development team, DAO, or individual developer to use within their own decentralized applications. This oracle will enable new possibilities for risk markets in DeFi that depend on granular token volatility data, such as options markets.
Premia V2 will be the first on-chain application to take advantage of the granular volatility data provided by this oracle. All of the options on Premia V2 are priced using the volatility surface provided by our Chainlink node, to ensure they are fairly priced.
As the industry-leading secure blockchain middleware, Chainlink enables existing APIs like ours to become easily compatible and accessible across leading blockchains. Additionally, the Chainlink node will cryptographically sign all data we supply on-chain to prove it originated from Premia, making it even more reliable when used to automate key functions.
Developers will be able to call the Premia Volatility Oracle on-chain to get high-quality options volatility data including the term structures, skews, and smiles of specific options. Smart contract developers can then build novel DeFi applications using Premia’s data. For example, Premia’s data can be used as an input within a dApp’s custom formula to price options or to create novel hedging instruments that help users manage risk.
Premia Expanding to Blockchain Markets Using Chainlink
Premia is a next-generation options AMM that enables best-in-class pricing based on market volatility, bringing fully-featured peer-to-pool trading and capital efficiency to DeFi options. Premia is developed by an experienced team of financial engineers, statisticians, and options traders that understand the deep intricacies of such markets. Our state-of-the-art pricing model ensures fair pricing for buyers and sellers based on the market’s supply and demand. We also use a continuous on-chain reinforcement learning algorithm to converge to the optimal market price and liquidity utilization rate.
The continued development of DeFi markets for options and futures will necessitate the need for reliable and specialized datasets. Given our extensive experience in traditional and DeFi markets, we want to make our volatility datasets available to other DeFi projects to support the industry’s growth.
However, blockchains are isolated networks and therefore have no built-in capability to call external APIs. Thus, we required the use of an additional piece of infrastructure known as a blockchain oracle to bridge our API data into blockchain networks.
As we have been actively integrating Chainlink-powered oracle solutions for Price Feeds and Keepers, it was clear that Chainlink was the ideal oracle solution to make our data widely available across different blockchains and open the door for future monetization of this data. Some of the valuable features of launching our own Chainlink node include:
- Data Signing — The Chainlink node cryptographically signs every piece of data broadcast on-chain from our API, preventing man-in-the-middle attacks and increasing its reliability in automating contract outcomes.
- Blockchain Agnostic — The Chainlink node is blockchain-agnostic, providing us with a single gateway to sell data to any current and future blockchain.
- Large Market Access — Chainlink is the most widely used oracle solution in the smart contract economy, providing us with a large and growing market of potential data consumers.
- Secure Infrastructure — Chainlink is thoroughly audited open-source software that collectively secures tens of billions of dollars in value on mainnet, proving its ability to protect and trigger the movement of real economic value.
“We are excited to launch a Chainlink node and make our refined volatility data available across numerous leading blockchains,” said Coin Alchemist, Premia Lead Social Media Intern. “Through our Premia Volatility Oracle, other DeFi projects will be able to tap into our extensive industry experience in generating high-quality volatility data, ultimately enabling them to build options and other risk markets at an accelerated rate and with more reliability.”
Chainlink is the industry standard oracle network for powering hybrid smart contracts. Chainlink Decentralized Oracle Networks provide developers with the largest collection of high-quality data sources and secure off-chain computations to expand the capabilities of smart contracts on any blockchain. Managed by a global, decentralized community, Chainlink currently secures billions of dollars in value for smart contracts across decentralized finance (DeFi), insurance, gaming, and other major industries.
Chainlink is trusted by hundreds of organizations, from global enterprises to projects at the forefront of the blockchain economy, to deliver definitive truth via secure, reliable oracle networks. To learn more about Chainlink, visit chain.link. To understand the full vision of the Chainlink Network, read the Chainlink 2.0 whitepaper.