Overview

Note: To avoid confusion between an option contract and a blockchain smart contract, we will start refering to the former as "instruments" and the latter as "contracts".
(Blockchain smart contracts are pieces of code through which protocols are implemented on the blockchain.)

The Volorca Protocol is made up of a Factory contract, through which Instrument contracts are created.
Each Instrument contract is a smart contract that represents an option.
Each Instrument contract is created with a set of parameters, which are immutable once the contract is deployed.

The Factory contract is responsible for validating the parameters of each Instrument prior to deployment and keeping track of the versions of each Instrument.

The Instrument contract is responsible for holding the collateral, minting LONG and SHORT position tokens and facilitating redemption after expiry. (Redemptions are where position holders retrieve their payout after expiry.)

LONG and SHORT position tokens are ERC-20 tokens that represent a single unit of the holder's position in the instrument. (See position naming details here.)

The amount of position tokens held impacts the amount of currency tokens the holder is entitled to at redemption.