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Addressing Options Protocols’ Needs: Premia Blue Integrates RedStone Oracles

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Discover the case study of Premia x RedStone Oracles Integration

The collaboration between Premia and RedStone Oracles has fortified Premia Blue’s operations in the DeFi landscape. RedStone’s adaptability enables quick addition of new price feeds with minimal coding, enhancing the protocol’s robustness. The introduction of a Time-Weighted Average Price (TWAP) feed and a precision-focused on-chain price mechanism further safeguard against potential price manipulations. Through this partnership, Premia benefits from transparent, timely, and reliable price data, ensuring a trustworthy and efficient DeFi marketplace.

What’s Premia Blue?

Premia Protocol is a suite of upgradable smart contracts that facilitate peer-to-peer market making and trading of options on ERC-20 tokens available on the Ethereum blockchain and with a settlement engine. This can be thought of as the “base” layer. Premia Blue (v3) is a non-custodial options exchange with fully customizable range orders, permissionless pools, options vaults, OTC liquidity, and a limit-orderbook.

Premia Blue architecture

Premia options are ERC-1155 tokens that offer the holder the right (but not the obligation) to buy or sell the underlying token on a specified date. While traditional stock option contracts usually represent 100 shares of the underlying stock, options on Premia represent the same number of tokens as described.

For example, a 100 ETH call option represents the right to buy 100 ETH at the option’s strike price by the option’s maturity date.

Each option pool has a token pair (e.g. ETH/USDC), an option type (call or put), a strike price (the price at which the option can be exercised), and a maturity date (the expiration date of the option).

Each option is a pool and each market (ie. ETH/USDC) has multiple pools. Every option is defined by a token pair (oracle feed), expiration, type, and strike price.

Premia’s Oracle Needs

As an options protocol rooted in the intricate world of DeFi, Premia is contingent upon the reliability of instantaneous price feeds for its effective settlement and operations. Unlike traditional centralized exchanges, the decentralized architecture of DeFi introduces distinct challenges when it comes to oracle integration. Our foremost requirement was not just the accuracy, but also the robustness of these feeds, ensuring they remain resistant to potential manipulations. Additionally, given the dynamic nature of asset pairs, the flexibility to seamlessly expand and adapt was indispensable.

“Redstone’s transparency and multiple integration options were also beneficial for meeting our use cases. Their modular oracle architecture allows new price feeds to be added with minimal code changes, enabling us to rapidly support new assets. Having historical records as well as current prices ensures we can analyze performance over time” said Premia Founder.

Implemented Solution

To address the complexities and potential vulnerabilities associated with the PREMIA token’s price discovery, we devised a comprehensive solution. First, we established a dedicated price discovery mechanism for the PREMIA token. This mechanism leverages data from Uniswap, Sushiswap, and Camelot and includes an automatic slippage detection feature. 

Flowchart showing implemented solution

In addition, we introduced a dedicated TWAP (Time-Weighted Average Price) feed. This feed averages the token’s price over an extended 60-minute period before updating it on the blockchain, significantly minimizing the threat of malicious price manipulation moments before expiration. 

Lastly, to ensure the timely and accurate representation of prices, we incorporated a mechanism that pushes the price on-chain at an exact timestamp. This system is designed to make multiple attempts shortly before the set deadline, subsequently offering the capability to choose the nearest timestamp post-deadline.

Premia Blue Team Exclusive Interview

Our speaker is Premia’s Founder.

1. Can you describe your initial oracle problem in a few sentences? 

“As an options protocol, Premia requires ultra-reliable, real-time price feeds for settlement and operations. The decentralized nature of DeFi presents unique oracle challenges compared to centralized exchanges. We needed robust, manipulation-resistant feeds across many asset pairs with the flexibility to expand.”

2. What are the exact obstacles and limitations you encountered? 

“Our main obstacles were finding price feeds with institutional-grade data from top-tier sources, low latency, resistance to manipulation, transparency, and modular expandability. Many options lacked breadth across assets, relied solely on unverifiable community-based sites with low accountability, given the constraints of Arbitrum, could potentially be manipulated, or had opaque methodologies. We also required historical data for some use cases, not just current prices.”

3. Why have you decided to integrate RedStone?

“We selected Redstone because of their institutional data model aggregating prices from 50+ sources, including best-in-class providers. This provides Premia with accurate, real-time market data from reputable sources, strengthening the integrity of our platform’s price feeds.

Advanced notification of feed changes and proactive monitoring demonstrate Redstone’s commitment to reliability and our quest to provide a best-in-class exchange with zero defects. Their technology helps us maintain these high standards of fairness, security and efficiency on our decentralized platform despite DeFi’s inherent oracle challenges.

Redstone’s institutional-grade oracle solution provides the transparent, timely and flexible price data essential for Premia’s exchange operations and continued expansion. Their collaboration enables the accuracy and reliability needed to build trust in a DeFi marketplace, and are happy to utilize Redstone as a recommended Oracle provider for our permissionless pool deployment.”

About RedStone

RedStone is revolutionizing the Oracles industry by implementing novel modular design and 3 tailor-made data consumption models. You can build the new generation of DeFi & Web3 protocols based on RedStone’s versatile data offering of long-tail, LP, LST, and Ecosystem-native tokens, as well as Real World Data and custom feeds.

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