On Oct 26th, Slope Finance was delighted to invite Psy Options Core Contributors Jason and Stockemart to share Psy Options with Slope Community users. Here are the AMA recap:
Q1: Could you please introduce yourself @stockmart @PlinyTheElder and PsyOptions to our community?
A1: Hi all! My name is Jason Chitla (@jasonchitla) and I am PsyOptions lead front-end engineer. I just recently lead the Slope Wallet integration 🔥
A2: and I’m stockmarket, I lead social media as well as partnerships for PsyOptions!
For those who have not heard of PsyOptions, it is an asset-settled, American-style options protocol built on the Solana blockchain. It is completely trustless, and the core protocol is built with flexibility and composability in mind!
Q2: Why did you choose to build an options platform?
A2:: Our founders were initially looking to build automated options trading strategies, but were rejected by a TradFi firm when requesting API access.
This was the seed idea, and once they discovered the young Solana ecosystem it naturally made sense to build the first options trading platform on the blockchain that anyone could have access to.
Q3: How do options benefit traders?
A: Depending on their goals, options can benefit traders in a few ways. One, they can use options to hedge existing positions. Two, they can write options on their assets to generate income through strategies such as covered calls and secured puts. And three, options can be a powerful speculative instrument.
Q4: Are there other options protocols on Solana?
A2: PsyOptions is currently the only options protocol live on mainnet. We offer options markets on both BTC and ETH for the months of October and December, and we will be rolling out markets for November shortly.
Q5: How does PsyOptions work?
A1: To write an option, one must lock the underlying asset in the amount specified by the options market.
The option writer will receive two SPL Tokens. One represents the option, which the user may sell to generate yield. The other represents the written contract (the claim on the underlying asset) and can be exchanged for the underlying asset post expiration.
Take a SOL/USDC option with the underlying asset size of 100, 100 SOL would be locked in order to mint the option token.
now, exercising an option:
Holding an option token pre expiration gives the user the ability to exercise by swapping quote asset for the underlying asset.
Whether the option is in the money or out of the money, it's completely up to the token holder whether or not to exercise. When exercising, the exerciser locks [strike price * underlying asset size] worth of quote asset, burns the option token and receives the underlying asset.
Q6: Can you trade structured products/more advanced options strategies?
A1: Something great that came out of the most recent hackathon was a couple of projects building Structured Products Protocols on top of PsyOptions.
They allow users to deposit assets into vaults that perform different automated strategies to earn yield.
Examples of those strategies are:
Covered call: You own an asset and want to generate income while holding your long position.
Volatility yield: Trade volatility and scalp profit from price movements in either direction. This vault is a structured volatility portfolio built to earn returns that are negatively correlated to the market. Arbitrage differences between implied and realized volatility.
Hedge impermanent loss: Neutralize your exposure to IL while earning great APYs providing liquidity across Solana.
to learn more about those projects, you can find them on Twitter: @friktion_labs
Q7: Future plans for PsyOptions?
A1: we have a lot of future plans which is why we have been hiring!
for example, we have: options on $SOL which should be coming out soon
Tommy, one of the founders and core protocol engineer has been working on European style options which is more capital efficient
another frontend engineer on our team, Jason Hargrove, is working on a “Carta” for Defi where companies can manage options vesting and also we put a large focus on helping other projects (like structured products protocols) build on top of PsyOptions, and rewarding them for doing so!
1.As the only one American style options protocol built on Solana, how do you plan to make more users know about your difference and take part in it? Any plans?
A2: This is an interesting question because at the moment, options trading is still a pretty niche market within the crypto
Our near term plan is this
To help get users more interested in utilizing options, we are starting to ramp up our educational content. We are starting up the “PsyAcademy” which will provide information on the basics of options, as well as a “PsyOptions Insights” which will contain articles from veteran options traders. These will be found on our Medium page.
We are also creating video content for YouTube!
2. Compared with other products of the same type, what are your advantages? Are there any technological breakthroughs you are proud of?
A2: The most significant advantage that PsyOptions has in my opinion is how it is compatible with any and all SPL tokens. This means that any token on Solana that follows the SPL token standard can have options markets created for it. This means there could be options on NFTs and in-game assets in the future!
3. It seems like that PsyOptions did not start promotion yet. When will you start marketing? And how to extend the global market? Do you have any recruitment plans?
A2: We have primarily been focused on creating a great product at the moment, but are definitely starting to ramp up our marketing efforts through the PsyAcademy and PsyOptions Insights initiatives mentioned previously, as well as through partnerships with great projects such as Slope!
4. In the crypto world Security is the first priority of all projects, Many projects were hacked and lost tons of money, how will you solve security problems?
A2: yeah, very interesting especially for Solana-based projects as from my understanding there has yet to be a major hack within this ecosystem. probably due to the differences in rust vs solidity. but on our end, PsyOptions has gone through extensive peer reviews, as well as testing. We are currently awaiting an audit, but at this time there are so few auditors for the Solana ecosystem, and with an explosion of growth it takes time for them to get to it. So for now it’s all about testing, testing, testing and peer reviews. Maybe @PlinyTheElder can give more insight into the developer practices
A1: yes there's a big focus on test-driven development especially at the protocol level, that way it's safer when we update the protocol
For example, Tommy rewrote the protocol to use anchor, and it was quicker and safer bc of test-driven development
5. Can we know more about your team? how did you come up with PsyOptions?
A2: Our founders came up with PsyOptions after being rejected API access from a TradFi firm when trying to build out automated options trading strategies
A close friend introduced them to the Solana ecosystem and suggested they enter the second hackathon. They ended up winning first place alongside our good friends at Mango Markets!
From there it remained a pretty small team of only two full-time devs, and then they started onboarding more team members such as @PlinyTheElder and myself a few months ago