Derivatives is one of the most developed sectors on the Ethereum blockchain, where it has a billion dollars in total value locked. How about the current state of derivatives on Solana? Today, I will give you clear information about one of the leaders in the options field on the Solana blockchain, named PsyOptions!
In this article, I will explain about PsyOptions, including the following information:
- What are PsyOptions and the PSY token? How does PsyOptions work?
- Specific details about PSY token and its tokenomics, including its up-to-date price, key metrics, distribution and use cases.
- How to get PSY? Where to store it?
- Roadmap & information about team, investors and partners.
What is PsyOptions?
PsyOptions is an American-style options protocol built on the Solana blockchain. Options are represented as SPL Tokens, which means they can be traded on any DEX that supports SPL Tokens. PsyOptions V1 supports 100% collateralized, asset settled, covered calls and secured puts.
How does PsyOptions work?
There are five main parameters that the protocol uses when interacting with options markets:
- Underlying assets: Base Assets (ex: BTC, ETH, etc.).
- Quote asset: The asset used to price the underlying asset.
- Contract size: The size of the underlying asset to put in an option.
- Strike price: The price in which the option owner exchange quote asset into underlying asset.
- Expiration: The last date where the option may be exercised/expired.
After setting these 5 parameters, we will go through two steps:
Step 1: Writing an option:
User locks the specific amount of underlying asset to mint the option token. The option writer will receive two SPL Tokens:
- Option token, which the user may sell to generate yield.
- Written contract Token (Token to claim on the underlying asset) which can be exchanged for the underlying asset post-expiration.
For example: If you deposit 100 SOL (underlying asset) into an option, you will receive 100 option tokens of SOL plus 100 Written contract tokens in order to claim your initial deposited SOL back
Step 2: Exercising an option:
Holding an option token gives the user the ability to swap the quote asset for the underlying asset.
When exercising the option, the exerciser locks [strike price * underlying asset size] worth of quote assets, burns the option token, and receives back the underlying asset.
The highlight of PsyOptions is the project that allows both buying and selling options (Option Writer). Unlike on Binance, where users are only able to buy call/put options.
At this time, PsyOptions only allows American Options while European Options is still in development. The main differences between these two styles are:
- American Options: American-style options give users the ability to exercise an option at any time until the expiration date → American style brings more flexibility to users because they can exercise the option contract whenever they want.
- European Options: In contrast, European-style options give users the ability to exercise an option only at the expiration date.
In the future, PsyOptions will use Serum Core (a new upgraded version of Serum Project) to create a European-style mortgage options protocol. The removal of the requirement for token-based positions allows users to create more robust portfolios across multiple positions. This greatly increases capital efficiency compared to the American-style PsyOptions protocol.
What is the PSY Token?
PSY is the native token of the PsyOptions protocol.
PSY token metrics
- Token Name: PsyOptions Token
- Ticker: PSY
- Blockchain: Solana
- Token Standard: SPL
- Contract: PsyFiqqjiv41G7o5SMRzDJCu4psptThNR2GtfeGHfSq
- Token Type: Governance only
- Total Supply: 1,000,000,000 PSY
- Circulating Supply: 62,000,000 PSY
PSY Token Allocation
- DAO Treasury: 60%
- Team/Contributors/Advisors: 15%.
- Private Round 1+2: 12%.
- External Contributor Fund: 8%.
- IEO: 3%.
- PSY Liquidity Provisions: 2%
PSY Token Release Schedule
Team and Private Round coins are vested for four years with a one-year cliff.
However, during the Token Generation Event, 10% of the Private Round 1 and 10% of the Private Round 2 coins will be available on the market at launch.
PSY Token Use Case
At this time, PSY token is only for governance. Therefore, PSY holders can not stake PSY in the protocol to earn yield or receive any part of the revenue generated by the protocol. However, this can change in the future through on-chain governance.
How to buy PSY Token
You can buy PSY Token through these exchanges: FTX, Gate.io, AscendEX.
How to store PSY Token
You can store PSY token on Coin98 Wallet when the token is supported.
Team, Investors, and Partners
Tommy Johnson - Protocol Development: Tommy is an original contributor to PsyOptions, as he was a part of the team that won the Solana x Serum DeFi Hackathon.
Taylor Johnson - Front-end Development: Taylor is another member of the original hackathon team that won the Solana x Serum DeFi hackathon (Tommy and Taylor are twins).
Spencer Farrar - Leading Strategy and Business Development: Spencer previously worked at Bienville Capital, an asset management firm with $4bn AUM, leading their crypto focused-fund, and has been in the crypto industry for over five years
Along with many more contributors that work at PsyOptions.
In the past, PsyOptions received up to $3.5M funds led by Alameda Research. Other prominent ventures are CMS Holdings, Ledger Prime, MGMR, Wintermute and Airspeed 18
PsyOptions x Serum Core
PsyOptions integrated Serum Core to build decentralized options, the first partnership that promises to bring many breakthroughs.
Serum Core is the latest upgrade of the Serum Project. This is a protocol that provides a liquidity infrastructure for decentralized applications (Dapps) built on the Solana blockchain.
PsyOptions will leverage Serum Core's novel architecture to create a European-style undercollateralized options protocol on Solana.
PsyOptions is one of the first derivative protocols built on top of Serum and Solana. They are a major contributor to the development of Serum. PsyOptions is committed to sticking and sharing the same vision with Serum as they get ready to adapt and adjust the project to accommodate important upgrades in the Serum and Solana ecosystem.
PsyOptions x Aleph.im
In December 2021, PsyOptions partnered with Aleph.im to use their indexing solution to build a business intelligence dashboard. Users will be enabled with all of the options data and metrics they need.
PsyOptions x Symmetry
They also partnered with Symmetry. Symmetry Index Managers will be able to add options tokens to their index
Roadmap and Update
Three protocols were built on PsyOptions, including Frikton, Tap Finance and Katana
- PSY IEO January 18th, 2022 on FTX & Gate
- Take PSY Market v1 to Devnet. The v1 is a protocol with portfolio margined European style options
- Launch options portfolio manager with non-trading UI, and exercise recommendation for recipients of option based liquidity mining.
- PSY Market v1 Mainnet
- Launch a swap based DEX
- Expand PSY ecosystem structured products beyond short vol.
- PSY Market v2: Integrate futures trading
- PSY Market v3: Integrate spot markets
Note: Q3 & Q4 2022 may be subject to change in the future.
Is PsyOptions a good investment?
2021 was an incredible year for PsyOptions, as they won first place in the Solana x Serum Hackathon and then sponsored a hackathon prize of their own during the Solana Ignition Hackathon.
PsyOptions also developed a non-trading dashboard for managing users’ option liquidity and a beginner UI for newbies who are unfamiliar with options. In the picture below, we can see that the derivatives sector on Solana is still in its infancy and there is obviously plenty of room for this sector to expand in the future.
However, as PsyOptions is still in its early stages, we need to wait to observe how the team works with the planned roadmap.
Some other projects about options trading are Zeta Markets, Opyn, Hegic,...
Coin98 Insights hopes you have gained all of the important information about PSY including its features and highlights throughout this topic. If you have any questions about PSY or want to know more about PSY, please feel free to leave a comment below to get support.