Psy Biweekly Update
In this update we will be covering the progress made thus far on our next product, an under-collateralized and cash settled European style options trading protocol, primarily our on-chain Black-Scholes algorithm that we’ve been working on for it. Additionally, we have a few community updates for the Psy faithful!
Friendly reminder before we get into the update: SOL options are live on PsyOptions!
For our upcoming European style options protocol, currently dubbed “PsyMarkets”, we’ve been trying to figure out how to counter certain attacks on the market in times of low liquidity, and generally how to stop users from getting liquidated when the market has poor liquidity.
We also settled on using Black-Scholes to set limits on the market price of the option for collateral purposes. Black-Scholes on-chain is a fairly big technical challenge. It requires hard math that eats a lot of resources, plus you need IV and risk-free interest rate information that is currently not offered on Solana yet. Here’s a chart to demonstrate how close the estimate provided by our prototype is to the real prices currently available on PsyOptions SOL markets. (NOTE: This is not financial advice, Black-Scholes pricing is not completely accurate for American style options)
The on-chain version is working, albeit rather slowly. At current compute limits we can support 2–3 solo positions per mark price update, however, there’s no limits when it comes to running strategies! We’re currently working on improving the on-chain Black-Scholes algorithm to handle more positions. This will (probably) be the first on-chain Black-Scholes on Solana!
We’ve also been working on the Tokenized European Options UI which will allow any of our users, not just institutions, to place bids on the markets PsyFinance v2 is going to roll through. To clarify, these “Tokenized European Options” are NOT the same as the aforementioned “PsyMarkets”. Think of it like this: PsyMarkets is a completely new protocol, while the Tokenized Euros will be an upgraded version of our current protocol. More details on the Tokenized Euros will be released as the launch to mainnet nears.
Finally, we’ve been grinding away on PsyFinance v2, but we’ll save that for its own update ;)
Finally, we have weekly community chats every Monday at 17:00 UTC in our Discord. Mark those calendars, and come join us!