Premium distribution
Underwriters are paid at the moment a contract is sold, not at expiry.
How the premium is split
- The business pays the premium plus a platform fee.
- A 2% liquidity fee is taken from the premium.
- The rest, the net premium, is split between the contract's backers in proportion to the reserve each one provided.
- Each share is added to that underwriter's free money straight away.
Your premium is the net premium multiplied by your share of the contract's reserve.
Example
Premium 201.25 USDC. Liquidity fee 2% = 4.03. Net premium 197.23, split between two backers who reserved 40% and 60%:
| Underwriter 1 | Underwriter 2 | |
|---|---|---|
| Reserve | 421.05 | 631.58 |
| Premium received | 78.89 | 118.33 |
Fair to early and late underwriters
Because each contract pays only its own backers:
- an underwriter who joins after a contract was sold does not share its premium, and does not carry its risk;
- an underwriter whose money was all reserved when a contract was sold does not back it, and does not share its premium.
Your premium is yours as soon as it is credited. It is free money: you can withdraw it or leave it to back new sales.
Creator share
The pool creator receives 5% of every platform fee the pool generates, including 5% of the liquidity fee. This is paid by the fee, not by underwriters' premiums.