FTX's latest IE0 project PsyOptions: Solana's on-chain options

Original title: "Understanding FTX's latest IE0 project "PsyOptions" in one article"

Original source: Odaily Planet Daily

January 4, Beijing time Today, the encrypted trading platform FTX announced that the latest  IE0 project is the  DeFi  option protocol PsyOptions (see the end of the article for specific rules).

PsyOptions is a decentralized options protocol built on the  Solana  blockchain, which is unique in that it focuses on physical delivery and American options. In the official introduction, PsyOptions aims to “bring the feel of TradFi to DeFi” by building a decentralized, permissionless, community-owned financial services platform.

The founding team of PsyOptions has been focusing on the construction of the Solana ecosystem, and has participated in the DeFi "Hackathon" held by Solana&Serum  twice. In the first "Hackathon" event, the team created an oracle project inspired by  Chainlink , but failed to get the ranking, regrettably lost to the north; in the "Hackathon" event in February this year, the team aimed at DeFi Derivatives track, created the Solana ecological DeFi option agreement, and finally won the championship, PsyOptions also came into being.

After half a year of preparation (technical development, legal compliance), PsyOptions officially launched the Solana mainnet and launched the v1 version in August last year. PsyOptions V1 is a clearing and settlement layer for options on Solana. In the absence of external dependencies (that is, oracle machines), anyone can create options for any SPL standard Token in any time period in a completely trustless manner, including Token , NFT  and Token stock.

“The core agreement is completely trustless, does not make any assumptions about how options should be traded or priced, allows users to price according to their wishes, Serum’s market making Traders will price options as they see fit," says PsyOptions.

The so-called option is to give the buyer the right to buy and sell the underlying asset at the agreed price and date, but there is no obligation. There are five concepts involved in PsyOptions options, namely: underlying asset, quote asset, contract size, strike price, and expiration date. Below, we specifically introduce the use cases of PsyOptions options.

Assuming that the current SOL price is 170 USDT, user Xiao Qin believes that the future SOL price will fall or remain volatile, but user Xiao Zhang believes that the SOL price will soar. At this time, the two can choose to trade through options to hedge risks. The two agreed that one month later, Xiao Zhang would buy 100 SOL from Xiao Qin at a price of 190 USDT. In order to facilitate the timely performance of the contract, the two generate a SOL/SUDT call option through the PsyOptions option agreement. Xiao Zhang is the buyer of the call option, and Xiao Qin is the seller of the call option. In the above case, the underlying asset is SOL, the quote asset is USDT, the contract size is 100, the strike price is 190 USDT, and the expiration date is one month later.

In terms of specific operations, Xiaoqin needs to mortgage 100 SOLs into the option agreement first to ensure normal repayment in the later period; after the mortgage is completed, he will receive two indivual Token - options Token and rights Token , both of which are SPL Token standard.

"Options Token ", Xiao Qin can sell to Xiao Zhang, the specific price can be set by himself, and he can sell at a premium; after the expiration, if the SOL price rises to 170 US dollars or above, Xiao Zhang can use the option Token Buy the agreed amount of SOL at an exercise price of $170; if the SOL is less than $170, Xiao Zhang can choose not to exercise the option and directly abandon the exchange. In either case, post-expiration options Token will be destroyed.

"Benefits Token "is a claim on the underlying asset. After the option expires and the option buyer's debt is repaid, the remaining underlying asset belongs to the equity Token . For example, after the expiration date, Xiao Zhang took away 70 SOL, then Xiao Qin's "equity Token "There are only 30 SOL left; if Xiao Zhang abandons the exchange, the equity Token Still 100 SOL.

Through the above introduction, we found that the PsyOptions option is expressed as SPL Token , which means they can be run on any SPL-supported Token Transactions on the  DEX  of DeFi become the basic module combined with other DeFi protocols. such as options Token ,rights and interests Token , you can carry out mortgage loans before the due date, but as time approaches, its value may continue to decay. This design also reflects the flexibility and composability of the PsyOptions protocol.

In addition, the final delivery of PsyOptions options is physical settlement, and users can obtain the underlying assets (that is, SOL in the previous article, or other currency-based assets), while currently The vast majority of options or futures are settled in cash (that is, settled in stablecoins such as USDT).

Both methods have their own advantages and disadvantages. For loyal currency-based users, they may be more willing to use physical settlement; but on some infrastructures with underdeveloped cross-chain tools, such as the number of BTC locked on the Solana blockchain is currently less than a few thousand, Physical settlement will be limited, and it is more advantageous to adopt cash settlement at this time. Furthermore, the PsyOptions protocol will require users to lock the underlying assets, resulting in locked Token Cannot be used for governance or other revenue generating strategies.

In terms of financing, in October last year, PsyOptions announced the completion of the first round of financing of US$3.5 million, led by Alameda Research, CMS Holdings, Ledger Prime, MGNR, Wintermute and Airspeed18 Participate in voting.

Token aspect, the PsyOptions protocol natively Token It is PSY and also the governance of the project Token , the income generated by the agreement can be voted and managed, and the pledge mechanism will be launched in the future. According to the official plan, a total of 3% of PSY Token IE0 will be held on FTX and Gate in the near future. Cryptorank data shows that the return rate of FTX IE0 projects has been generally high in the past two years, with the highest return rate in history ranking second and the current return rate ranking third, as shown below:

FTX also announced the specific rules for participating in PsyOptions IE0 today. For details, please refer to the official announcement: https: //help.ftx.com/hc/en-us/articles/4414515394836

- Before 13:00 (UTC) on January 17, 2022, stake Users with ≥150 FTT and KYC level 2 certification can participate in this round of PsyOptions pre-sale Users who submit identity verification applications after 13:00 (UTC) on Sunday will not be guaranteed to participate in the pre-sale event.

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