Stake & Cover Pool
Writing Options on Nexo Options
What is the Stake & Cover Pool?
Stake & Cover (S&C) is the liquidity provision and utilization model introduced on Nexo Options.
Unlike other systems, there is no division into separate liquidity providers, stakers, premiums, or settlement fees. Instead of multiple pools and contracts, there is only one Nexo Options Stake & Cover pool.
Staked $NEXO tokens are used to cover the protocol’s net losses from selling options/strategies and to earn net profits from all expired ones.
With Stake & Cover, token holders deposit $NEXO into the pool, which serves as collateral for options and strategies acquired through the protocol. Participants in the Nexo Options S&C Pool receive 100% of net premiums earned from selling ATM & OTM options (ETH and BTC calls & puts) and structured strategies.
Net premiums (or losses) are distributed pro rata among all participants. The net premium is the difference between total premiums received and total payouts to holders who exercised in-the-money options/strategies.
How is P&L Distributed Among Participants?
P&L is tracked during a fixed period called an Epoch.
If P&L is positive at the end of an Epoch, 100% is distributed in USDC.e to participants, pro rata to their share of the pool.
If P&L is negative, a pro rata share of $NEXO from the pool is converted into USDC.e to cover the loss.
The conversion rate is announced 5 days before a new Epoch begins. Initial USDC.e liquidity for conversions is provided by the Nexo Options Development Fund.
How Do I Claim Profits in USDC.e?
If you staked $NEXO during an Epoch that ended with positive P&L, you can claim your share of USDC.e anytime after the Epoch.
This profit is tied to your address and will not roll over into future Epochs.
If a later Epoch results in a negative P&L, it is covered from your staked $NEXO, not your unclaimed USDC.e balance.
How is the $NEXO/USDC.e Conversion Rate Determined?
The protocol uses experimental price monitoring mechanics to set the conversion rate, based on token price performance during the previous Epoch.
If you don’t agree to the announced conversion rate, you can request to exit participation in the next Epoch. In that case, your $NEXO will be returned to you at the end of the current Epoch. Otherwise, it is automatically rolled into the next Epoch.
What if Losses Exceed the Pool’s Capacity?
Risk management rules limit how many options can be sold, relative to the $NEXO staked in the pool. This includes balancing bullish/bearish options and high/low volatility strategies.
Until $NEXO liquidity on DEXs and CEXs becomes deeper, tokens collected from negative Epochs will be sold directly to the Nexo Development Fund (NDF) at a fixed price announced at the start of every Epoch. This protects the $NEXO market price by conducting OTC-style sales rather than dumping on exchanges.
Epoch Duration
Each Epoch lasts 45 days.
A new Epoch begins immediately after the previous one ends.
Durations can be adjusted to protect participants from extreme volatility.
$NEXO can be staked in S&C only during the first 7 days of each Epoch.
The $NEXO/USDC.e conversion rate for the next Epoch is announced 5 days before the current one ends.
Withdrawal requests can be made anytime but are executed at the end of the Epoch.
How to Track P&L During an Epoch
The current P&L of the pool can be monitored in real-time on the Stake & Cover page.
This value changes throughout the Epoch as options and strategies expire or are exercised.
The final P&L is fixed automatically when the Epoch ends.
You can independently verify results by checking the on-chain balance of the pool.
Historical Performance
Past P&L results for each Epoch are shown on the Stake & Cover page.
Past performance is not a guarantee of future returns.
Example: Positive and Negative P&L Outcomes
Example Setup
Fixed $NEXO price = $0.02
User “BigOptionPlaya” stakes 500,000 $NEXO (worth $10,000).
Total $NEXO staked in the Epoch = 100,000,000 $NEXO (worth $1,000,000).
Positive P&L Example
Total revenue from selling options = 500,000 USDC
Payouts to option holders (in-the-money) = 300,000 USDC
Net Premium = 200,000 USDC
Net P&L per $NEXO = 200,000 / 100,000,000 = $0.002 per $NEXO
User’s profit = 500,000 × $0.002 = $1,000
Initial stake = $10,000
Profit = 10% for the Epoch
Annualized APR = +120%
Negative P&L Example
Total revenue from selling options = 500,000 USDC
Payouts to option holders (in-the-money) = 600,000 USDC
Net Premium = −100,000 USDC
Net Loss per $NEXO = 100,000 / 100,000,000 = $0.001 per $NEXO
User’s loss = 500,000 × $0.001 = $500
Fixed $NEXO price = $0.02
$NEXO tokens lost = $500 / $0.02 = 25,000 $NEXO
New balance = 475,000 $NEXO (down 5%).
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