Taker Share

For Bumper v1.0, we adopt the “share of premia” approach for developing Taker positions.

We compute a “premium rate” for the ith Taker position, at time t, from the following inputs:

  • The deposit size, d_i

  • The selected term and floor price, which returns a risk rate, rate_i by look-up to the Taker Risk Matrix

  • The current total premium rate

  • The current Taker weighted average risk

  • The current value of the Book

The premium rate is given by:

The premium rate represents the rate at which the ith position accrues its premium, computed as a share of the global premium for the period that the position was active (see subsection: Close and Claim). The value of the Book is increased when a Taker joins the protocol by their deposit amount, and is reduced when a Taker ends their position by their remaining ETH balance, minus any accrued penalty premium and additional protocol fee.

Global state mutations:


The above formulas suffer from precision loss in Solidity. Alternatives are used in the reference implementation.

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