Ata from PsyFinance here to discuss collaborating on a liquidity mining program for PsyFinance V2 Option Vaults, which are run completely on Serum’s order books.
As many of you know, over the last few months there has been an explosion of Decentralized Option Vaults (DOVs) in the Solana ecosystem. These products are great for consumers seeking to enjoy sustainable yields through automated options strategies. They lower the barrier of entry for options and automate many of the tedious tasks like strike selection, price discovery and auto-compounding. Interestingly, it is estimated that equity option volumes in US markets eclipses even spot trading . If the explosion of options products continue on Solana, they represent a large growth opportunity for Serum which is largely untapped.
Over the course of the last 3 months the teams at PsyFinance and PsyOptions have been busy rolling out two improvements that take advantage of Serum’s CLOBs to increase options TVL on Serum and transparency in the DOV options sale process. The first is the introduction of a European Options Protocol, and the second is PsyFinance’s V2 Vault architecture. More detail can be found on the links above, but the TL;DR on why it’s important for Serum and our users is:
- Open Access: Democratizes access to the options sales, anyone with a Solana wallet can participate in the option auctions, thus increasing exposure to Serum’s order books to end users.
- Boosts Option Flow: Increases flow of long tail options volume through Serum order books
- Transparency: Increase transparency of the bidding process so all PsyFi users can observe in real time how their yields are being generated.
We’re writing to request a 2,000,000 SRM LM grant for a 3 month period specifically for these V2 vaults that operate on Serum. These funds will be beneficial in helping migrate users from our V1 vaults, which settle options OTC, to V2 which operate on Serum. Our target is to boost TVL to 100M of weekly option flow through Serum with the LM program.
In addition to bootstrapping liquidity of option volumes on Serum, the program will aid in diversifying the Serum holder base to a new segment of DeFi users that may not be exposed to spot trading (i.e. derivative fans).
With the 2M SRM tokens, we’ll plan on distributing them over the following V2 vaults.
- SOL Covered Call
- BTC Covered Call
- ETH Covered Call
- SRM Covered Call
- FTT Covered Call
- stSOL Covered Call
- scnSOL Covered Call
- USDC Secured BTC Put
There may be additional vaults launched as requested by users as well, which we will be happy to update the community with prior to starting LM emissions.
If the community is supportive of the grant, we have a number of collateral/events planned to support the LM program. To name a few:
- Teaser video for the new LM program
- Medium post on why the partnership with Serum is important both for PsyFi and Serum.
- Twitter spaces with Market Makers using the V2 vaults on Serum
- Weekly updates on notional amounts sold during Vault Auctions through Serum order books
- Teaser videos, and announcements of subsequent V2 Vaults launched, all of which will be settled through Serum order books
Excited at the opportunity to collaborate more closely with the Serum community and happy to answer any questions that you may have!