Premiablue
Premiablue range orders linked premium bands to directional LP exposure
Premiablue range orders concentrated V3 liquidity within option-premium bands and changed exposure for liquidity providers (LPs) as trades crossed those bands. The deposited assets and order direction determined whether execution opened or reduced an option position. Premia Labs later halted V3 development, so these mechanics describe the legacy system.
What did the premium bounds determine?
The lower and upper bounds defined the option-premium interval over which an LP supplied liquidity. A premium was the price of the option itself. The token pair, price oracle, call or put type, strike price, and expiration identified the option market. A strike described the contract's terms; the premium bounds described where the LP would trade it. Moving those bounds did not change the contract's strike or expiration.
Liquidity below the option's market price initially served the bid side, where traders sold into the pool. Liquidity above that price initially served the ask side, where traders bought. The deposited asset determined whether those trades opened exposure or closed contracts already held. A range offered liquidity for other traders to take. Depositing its full size did not mean that the whole amount immediately traded, because execution needed trading activity across its interval.
Collateral and option contracts followed different paths
Depositing collateral let a bid range buy options and build long exposure, while an ask range sold options and built short exposure. These were opening trades: the LP supplied funding for exposure that did not previously exist within that order. Reading the buy or sell direction together with the deposited asset explained the change in the LP's position.
Depositing option contracts reversed that starting purpose. Long options supplied to an ask range were available to sell and close. Short option contracts supplied to a bid range were available to buy back and close. The same market side could therefore serve an opening order funded with collateral or a closing order funded with contracts.
V3's Split-User Accounting preserved each path's direction. A range could open and close long exposure without becoming net short, or handle short exposure without becoming net long.
How did a return through the range change exposure?
A return through the premium band could reverse earlier inventory changes when trades crossed the liquidity in the opposite direction. Takers buying from ask liquidity moved the pool's option price upward. Takers selling to bid liquidity moved it downward. Trading changed the range's composition between collateral and option contracts along its selected exposure path. A range that had opened exposure could consequently close it during a return traversal.
An interval containing more liquidity required more trading to traverse than an otherwise equivalent interval containing less liquidity. Trade size also mattered relative to the available liquidity. A small reversal therefore did not establish that every earlier trade had unwound. The passage of time alone did not execute the remaining trades or close the option position.
Trading activity drove maker fees and position costs
Maker fees came from trades that used supplied liquidity, and their amount depended on participation in those trades. V3 allocated each pool trade's fee growth proportionally across liquidity overlapping the traded premium range. A deposit elsewhere in the pool did not establish participation in every trade. Likewise, more deposited capital did not create a fixed return: its share of liquidity where execution occurred governed its allocation.
Option premiums and maker fees represented different cash flows. Premiums paid or received affected the economics of acquiring or closing exposure. Fees compensated the liquidity that trading used. A position could collect fees while continuing to hold options, so fee income alone did not establish its net outcome. The quantity traded, achieved prices, remaining exposure, and applicable charges all mattered. Concentrating capital into a narrower premium band did not set the volume that traders would execute there.
Was a partial reversal enough to restore the starting position?
A partial reversal did not establish that a collateral-funded bid range had sold all the long options it had acquired. Remaining option exposure determined whether that return was complete.
Consider a hypothetical V3 bid range that started with collateral and acquired long options during downward trading. The premium then rose partway back through its band.
- Match the option contract, strike, and expiration when comparing the position before and after the return.
- Locate the option premium relative to both bounds; a rebound alone did not establish complete traversal.
- Inspect the remaining long exposure; a positive amount meant that the acquired options had not fully closed.
- Keep premiums received from selling options separate from the maker fees that trading generated.
- Assess recovered collateral using executed quantities, execution prices, and applicable fees.
The return to collateral was complete for this case when the acquired long exposure had fallen to zero through closing trades. The value recovered depended on actual execution, so the starting collateral amount was not a promised payout.
Range liquidity stayed distinct from vaults and signed orders
A direct range order supplied one option pool, while strategy vaults could manage strategies across option positions. Vaults could use range orders or provide quotes through the quote network. Signed orderbook offers supplied another source of liquidity, separate from a pool range's changing inventory. Premia Labs announced the halt of V3 development on August 15, 2025. Its development focus moved to Kyan, and Options Liquidity Mining emissions had ended. The development halt did not establish that every existing V3 contract or position had closed.
Details worth knowing about Premiablue range orders
When could a V3 liquidity provider withdraw a range-order deposit?
V3 range-order deposits had no mandatory commitment period and allowed withdrawal before option expiration. This concerned pool liquidity deposits; PREMIA staking locks followed their own terms.
Did valid tick endpoints guarantee an accepted V3 range width?
Valid tick endpoints did not guarantee an accepted range width in V3. The protocol restricted the difference between the bounds to an allowed set to avoid rounding errors. The interface handled those restrictions; direct deposits needed to respect them.
Could a V3 range start with both collateral and option contracts?
Yes, a range that straddled the current option price required both collateral and option contracts. Their proportions depended on the price and order parameters. Movement into the range during submission could change the required deposit composition.
How did CSUP and CS differ in their treatment of premiums?
CSUP (Collateral ↔ Short, Use Premiums) reused premiums toward collateral requirements, while CS (Collateral ↔ Short) kept premiums separate. Both supported conversion in either direction between collateral and short exposure.
Which token standards represented V3 range-order positions and option contracts?
V3 represented LP positions with ERC-721 tokens and option contracts with ERC-1155 tokens. A range-order position and the option exposure associated with it were therefore different objects. The range's collateral and option balances described its current exposure.
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