Oracle Papers
Launch

Section 09 / 12

Free Call Drops

Weekly out-of-the-money call allocations to top Oracle token holders, sized monotonically by rank and funded entirely from protocol fees.

Mechanism

At a weekly snapshot, eligible wallets are ordered by Oracle token balance and each top-ranked wallet is allocated a call option at zero premium. Eligibility exclusions are identical to those in Holder Perks.

Allocation Sizing

The maximum payout allocated to a wallet is a non-increasing function of its rank kk:

Mk=f(k),f(k)≥f(k+1),(1)M_k = f(k), \qquad f(k) \ge f(k+1), \tag{1}

so no wallet receives a larger allocation than any wallet ranked above it.

Strike and Expiry

Each allocated call is struck out of the money relative to snapshot spot,

K=(1+κ)⋅Ssnap,κ>0,(2)K = (1 + \kappa) \cdot S_{\text{snap}}, \qquad \kappa \gt 0, \tag{2}

where SsnapS_{\text{snap}} denotes the spot price of the underlying in SOL at the snapshot and κ\kappa the moneyness offset. Allocated calls have a fixed expiry, carry the standard capped payoff, and settle identically to purchased calls (see Settlement).

Funding Constraint

Allocations are funded entirely from protocol fees. The aggregate model value of a weekly drop is bounded by protocol fee revenue over the period:

Costdrop=∑kVmodel(Ssnap,K,τ,Mk)≤Protocol feesperiod,(3)\text{Cost}_{\text{drop}} = \sum_{k} V_{\text{model}}(S_{\text{snap}}, K, \tau, M_k) \le \text{Protocol fees}_{\text{period}}, \tag{3}

where τ\tau denotes the tenor of the allocated calls.