Q&A

Common questions about caput, how it works, and what it doesn't do.

General

What is caput? Software for writing and buying options on the XRP/RLUSD pair, settled through escrow on the XRP Ledger. The seller (seller) deposits an asset and earns premium income. The buyer (buyer) pays the premium and gains directional exposure — a call if they expect XRP to rise, a put if they expect it to fall. Settlement happens through the XRPL's native AMM. Self-custody escrow-options. No pools, no black box.

Is this a real option? It's a derivative. The buyer pays a premium for the right to benefit from price movement over a fixed term. The seller earns that premium for taking the other side. The economic structure is an option — premium, margin, expiry, calls, puts, settlement. The settlement mechanism is novel (AMM round-trip swap rather than a fixed strike/exercise model), which is why we call it an escrow-option rather than a vanilla listed option.

Is this an exchange? No. Caput is a binary you run. It coordinates a bilateral option contract between a seller and a buyer. There is no order book, no matching engine, no platform. You share an invitation link directly with your counterparty.

Is this DeFi? It uses the XRPL's on-ledger AMM and native escrow, so settlement is decentralized. But the bot runs on your server and you control the timing. It's closer to a self-hosted OTC derivatives tool than a DeFi protocol.

Who holds the funds? Three escrows on the XRP Ledger and a 2-of-2 multisig wallet. No one can move funds without both parties' signatures. The bot never holds keys.

What if the bot goes down? Escrows have a CancelAfter set to term + 30 days. If the bot dies permanently and nobody recovers it, escrows auto-refund to their original owners after that window. Premium reverts to the buyer in that case. Not ideal, but nothing is stuck forever.

For sellers

What is a seller? The seller creates the market. By depositing an asset and locking it for a fixed term, the seller makes an opportunity available that would not otherwise exist. The seller is compensated with premium — income earned for providing the market and for the duration their capital is committed.

How do I earn? Premium. The buyer pays a fee to participate in the market you created. That premium is yours from the moment the option opens, regardless of which direction the underlying moves. Your deposit is returned at settlement. You are not taking a directional position — you are earning income for making the market.

What's my risk? Operational. Your bot must stay online. If it goes down during a rapid rate move, the position can degrade past the buyer's margin coverage and your deposit absorbs the tail loss. The pre-signed hard liquidation (Variant B) provides a last-resort backstop, but uptime is your responsibility.

How many options can I write at once? As many as your wallet balance supports. Each option locks ~2.6 XRP in reserves plus the notional. Your license's use count limits total completed options, not concurrent ones.

Can I cancel an option after deploy? No. Once escrows are created and the position is live, it runs to settlement via one of the four resolution paths. You can create and revoke invitations before they're accepted, but a deployed option is a binding contract.

What happens to my deposit while it's locked? It swaps through the AMM to the opposite asset and sits in escrow for the term. You can't access it until settlement. The opportunity cost is real — the premium you earn compensates for it.

For buyers

What is a buyer? The buyer pays a fee (premium) to access the market the seller created. In return, the buyer gains directional exposure to XRP/RLUSD — a call if they expect XRP to appreciate, a put if they expect it to decline. The buyer's risk is defined and capped at premium plus margin.

What do I pay? Premium plus margin. Premium is the fee you pay to participate in the market the seller created — it compensates the seller for providing the opportunity. Margin is your risk capital — returned if the position doesn't move against you, reduced or consumed if it does.

What's my maximum loss? Premium plus your full margin. At hard liquidation (100% consumed), both are fully allocated. There is no mechanism to lose more than that. Your risk is defined before you sign.

What's my maximum gain? Uncapped. If the underlying moves strongly in your favor, the swap-back produces a surplus at settlement, and that surplus is yours. There is no ceiling on buyer upside.

Can I close early? Yes. Voluntary close (early exercise) is buyer-initiated. You request close, both parties co-sign, and the option settles at the current AMM rate.

How do I know the seller won't manipulate liquidation? Hard liquidation at 100% fires a pre-signed transaction with a fixed delivery amount (deposit minus margin). The seller cannot change this — it's baked into the signed blob at deploy. At any rate better than 100%, firing early delivers less to the seller than waiting would. The math makes manipulation self-defeating. Soft liquidation at 90% requires your signature — you can refuse if you disagree with the timing.

Do I need to install anything? No. You visit a URL the seller shares with you, review the option terms in your browser, and sign with your wallet app (Xaman, Crossmark, Gem, or manual paste). No binary, no account, no signup.

Technical

What's the AMM? The XRPL's native Automated Market Maker for XRP/RLUSD. It's an on-ledger liquidity pool. When the bot swaps your deposit at deploy and swaps back at settlement, it's trading through this pool at the current market rate. There is no oracle — the AMM is the price source.

What's RLUSD? A USD-pegged stablecoin issued by Ripple on the XRP Ledger. Issuer address: rMxCKbEDwqr76QuheSUMdEGf4B9xJ8m5De. Both parties need a trust line to this issuer.

What's a trust line? An XRPL concept. It's a one-time authorization that says "I'm willing to hold tokens from this issuer." You need one for RLUSD before participating. Set it up in your wallet app — the bot checks for it.

What's the multisig wallet M? A fresh XRPL account created for each option contract. Configured as 2-of-2 (seller + buyer). Master key disabled after setup. Holds funds only during the settlement transition. Deleted after settlement. Costs ~2.0 XRP in reserves, ~1.8 XRP returned at cleanup.

Why not use a smart contract? The XRPL doesn't have EVM-style smart contracts. It has primitives: escrow, multisig, path payments, AMM. Caput composes these primitives into a contract structure. The advantage is that every step is a standard XRPL transaction — verifiable on any explorer, no bytecode to audit.

What happens if the XRPL goes down? Settlement is delayed until the chain recovers. Your funds stay in escrow. The CancelAfter backstop still applies. This is a venue risk inherent to operating on any chain.

Can this work with other token pairs? The architecture supports any XRPL token pair with an AMM pool. RLUSD/XRP is the first pair. Swapping to USDC or another issued token is a configuration change (different issuer address, different trust line). The mechanics don't change.

Licensing

What does a license get me? A binary and a fixed number of contract uses. Starter: 1 use for $20. Standard: 5 uses for $50. Volume: 100 uses for $500. Paid in XRP.

What counts as a "use"? One completed option lifecycle. An option that deploys and settles (via expiry, voluntary close, soft liquidation, or hard liquidation) consumes one use. Failed deploys, abandoned invitations, and revoked offers don't count. The bot will always settle existing positions even if uses are exhausted.

Can I get more uses? Buy another license bundle. Uses stack. If you bought Starter (1) and later buy Standard (5), you have 6 total uses.

Is there a subscription? No. You buy once. The binary is yours. No recurring fees, no expiry, no phone-home.

Can I run multiple bots? Each license is tied to a wallet address. You can run one bot per license. If you want to run multiple bots (e.g., different wallets, different hosts), buy a license for each.