What is PsyOptions and its PSY token? Discover the features and functionalities of this ecosystem and direct access to the official website.
PsyOptions is an American style options protocol built on the Solana blockchain.
The principles that have guided the architecture and development of the core protocol are flexibility and composability. It is completely trustless. The core protocol makes no assumptions on how the options should be traded or priced. Options are represented as SPL Tokens, which means they can be traded on any DEX that supports SPL Tokens.
At the end of 2020, the founding contributors were looking to automate a yield generating, options trading strategy in TradFi. They called their brokerages to inquire about API access, but were immediately rejected. Fresh off the first Solana hackathon, it hit them. Why don’t we build vanilla options into the Solana blockchain. Anyone and everyone would have API access inherintly built in, so they could automate whatever strategy they’d like.
PsyOptions was born out of necessity. The goal is to democratize access to products and resources usually reserved to TradFi holders..
PsyOptions aims to bring a TradFi feel to DeFi by building a decentralized, permissionless, and community-owned financial services platform. Our vision is to not only provide our users with a decentralized options trading platform, but to become the de facto on-chain financial services platform for DeFi users across the globe. Our initial options protocols are simply the first step along the path of building towards this goal.
PsyOptions, how it works?
Writing an option
To write an option, one must lock the underlying asset in the amount specified by the option market. For a SOL/USDC option with underlying asset size of 100, 100 SOL would be locked in order to mint the option token. 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.
PsyOptions aims to become one of the foundational DeFi primitives on the Solana blockchain by offering completely trustless American style options for any SPL token.
Providing this clearing house infrastructure to the Solana ecosystem will allow for increased composability between protocols, helping teams align incentives between themselves, their investors, their community members, and more.
Exercising an option
Holding an option token pre expiration gives the user the ability to exercise by swapping the 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.
PsyOptions can be a lucrative strategy for cash management. Partner with this ecosystem to make liquid option markets on your tokens.