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Ledig keeps the funds backing an option separate from the earnings that writers can claim. This distinction matters because collateral must remain available for the buyer, while earned proceeds belong to their recipient.

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Full collateral before an offer is sold

A writer deposits the token the buyer may receive into the vault for the selected market. A vault is an onchain contract that holds collateral and records how much belongs to each writer. When the writer posts an offer, the corresponding amount becomes locked. When a buyer purchases that offer, the sold amount stays locked to back the buyer’s rights. The writer cannot withdraw that collateral while the obligation remains outstanding. For a right to receive 100,000 USDC, the matching 100,000 USDC is already committed. The design does not rely on the writer finding or depositing those funds later when the buyer exercises. Locked collateral is not lent, restaked or reused to support unrelated positions. Depositing collateral does not itself generate yield. Writer earnings arise when buyers purchase their offers.

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Three distinct places for funds

The holding contracts are also called escrows. They keep a record of each recipient’s claim. Premium earnings are separate from exercise proceeds because the two payments can use different tokens.

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Following a purchase and an exercise

When the buyer purchases, their premium funds the premium escrow. The protocol records the buyer’s rights and the writers backing them. Each filled writer earns their premium share as a claim, while the collateral remains committed. When the buyer exercises, they provide the required settlement tokens. The exercise transaction funds the settlement escrow and credits the relevant writers, then releases the corresponding collateral to the buyer. The buyer’s exercised rights are used up in that transaction. The buyer does not have to wait for each writer to collect their proceeds. Writers make separate claims afterwards. This also separates a recipient’s later claiming problem from the normal buyer transaction, although token restrictions and other failures can still affect settlement.

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One vault for each series

A series has its own fixed token pair, exchange rate and expiry. Its collateral vault is separate from the vault for another series, even if both use the same collateral token. Within a series, the protocol records which writers back each buyer. Exercising against one writer’s sold amount debits that writer’s collateral, rather than deliberately charging unrelated depositors. Series isolation does not remove every shared risk. Series can use the same token issuer, network, shared protocol contracts and governance arrangements. A problem with one of those dependencies can affect more than one market.

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What governance can do

Ledig manages access to new purchases and writer offers, approves supported assets and markets, and can pause new activity. The normal series pause blocks new purchases and new offers. It does not itself block cancelling unfilled offers, exercising valid rights before expiry, releasing expired obligations, claiming proceeds or withdrawing unlocked collateral. Removing a wallet’s entry permission does not erase its existing rights or obligations. In particular, an existing writer offer is not cancelled merely because the writer can no longer post a new one. The exchange terms of an existing series are fixed. Administrative powers over shared contracts and permissions still form part of the trust model. It would be incorrect to describe the protocol as having no administrative powers.

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What full collateralisation does not promise

Full collateralisation describes how option obligations are backed. It does not guarantee token value, eliminate writer exchange-rate losses or guarantee that every transaction succeeds under every condition. Contract defects, token freezes, operational failures and network problems remain relevant. Read risks and limitations before buying or writing an option.