Clubs, Wagers and Costs
Premium, collateral, liquidation, Black Scholes model, options are all big words which most of the users of our platform, and even our own team doesnt grasp fully.
So a better way to understand Protected Perps would be to understand what happens in a club.
I (as a man) have to pay an entry fees/cover charge to enter into a club.
That is the cost of entering into the game.
What is the payoff? Why am I paying this cost?
To come out with a girl.
After paying the cover charge, there is no loss in this equation beyond that cost.
Positive outcome for me would be coming out with a girl.
And if I dont, I dont lose anything more than the cost I paid to enter this game.
Same for Protected Perps.
The trader pays a cost to enter into a game where they get paid out if ETH goes up.
If it goes down, the trader loses nothing except the cost he has already paid upfront.