PsyOptions — The Thinking and Ethos Behind the Team — Serum Stories #6

Project Serum
Aug 16, 2021 · 5 min read

“We firmly believe all aspects of finance should be accessible to all as long as the end user is willing to acknowledge the risks. This is the ethos that our initial product was founded upon and the ethos that continues to drive our team.”

Welcome to Serum Stories #6

We continue to be inspired by the sheer number of ambitious and talented teams building amazing products on the bleeding edge of finance and technology. There are of course a number of exciting innovations happening in the world of DeFi, but one area of special interest that is yet to take off is derivatives. We’re very keen to see how these new products shape finance over the coming years.

This week we are joined by Psyoptions — winners of the first Solana season hackathon and avid contributors to the Serum ecosystem. PsyOptions are building decentralised options on Solana, focusing on physically settled and American style options as their niche.

In this week’s edition, we welcome Taylor and Tommy, co-founders of the PsyOptions team.

They’ve been quietly building and are excited to show off their hard work.

What’s up Next

1. — What is PsyOptions?

2. — The founding story

3. — What Inspired PsyOptions

4. — Physically Settled DeFi Options

5. — How Options Can Improve Incentives

6. — Memorable Experiences

7. — Looking Forward

Interview

1. You joined the Ecosystem at a pivotal moment for Solana, winning the first Solana Season Hackathon and going on to become the first and only options protocol to use Serum’s order book.

For the audience who may not be familiar with PsyOptions, what is your elevator pitch for new users?

PsyOptions is a completely trustless, American style, options protocol. Our American V1 contract makes no assumption about pricing or how to trade/transfer the option contract and has no reliance on oracles. For those reasons it creates an extremely composable primitive that can be used in unique ways.

2. As brothers you’ve both been hacking your way around the tech scene since your younger years. Can you share more about this story and how you came to build out the team?

Sure, we both studied electrical engineering in undergrad and have been to well over 20 hackathons (we used to follow Major League Hacking around the undergrad circuits). We’ve always been entrepreneurial and constantly hacking on some kind of side project. We’ve built out so many ideas before, but when we came up with the idea for PsyOptions we thought it was really cool and decided it could be a huge product.

We broke down what an option is at a fundamental level and put together an architecture for options on Solana. After reaching out about a grant, the Solana team guided us towards the hackathon. It was then that we took to the Solana Discord to find the Solana Soldiers that would help us realize the vision of on chain options trading on an orderbook. Since then we’ve continued to pull together our team from dark corners of CT and crypto Discord servers.

3. PsyOptions was conceived out of challenges from personal anecdotes your team faced in the TradFi world. Would you like to expand on your experiences and how they shaped your own personal values?

Many aspects of TradFi are gated, and only select individuals and institutions have access to the tools and data to make the best decisions. When asking a brokerage for API access to build automated option strategies, they shrugged us off, as if we didn’t have any idea what we were trying to do. We firmly believe all aspects of finance should be accessible to all as long as the end user is willing to acknowledge the risks. This is the ethos that our initial product was founded upon and the ethos that continues to drive our team.

4. You mentioned that one important difference that sets PsyOptions apart from others is that you’re planning to have physically settled vs cash settled options. For our audience, would you mind elaborating on the differences and any other differentiating factors for your protocol design?

Sure! Physically settled options are where the underlying asset changes hands upon the option being exercised. So in the case of a SRM call option denoted in USDC, the exerciser will exchange USDC for the SRM. Cash settled does not have this swap part. Instead, if this SRM-USDC option is ‘in the money’ at expiration, the holder will receive USDC.

Cash settled protocols must rely on price feeds in order to determine if an option is in the money or out of the money. In PsyOptions V1, the holder of the option can choose to exercise no matter the price (even if it’s disadvantageous) because the protocol only needs to swap the 2 assets.

5. Incentives clearly play an important role in DeFi and it seems that options are a key missing piece for the ecosystem, especially for decentralised teams and ecosystem contributors. Would you mind expanding on why you think options are an important next step for Defi and some of the creative ways options can be used?

In the startup world, options are used as a way to incentivize early employees when the company’s equity is illiquid. This is often done for tax purposes. Similar incentive mechanisms can be used in a decentralized manner to incentivize early community members and contributors. Rather than airdropping unlocked tokens, airdropping options can add a similar incentive without the immediate sell pressure. They’re also a financial primitive that has a time decay, which can allow for more interesting incentive strategies.

6. Looking back, would you like to share some of your positive or most favourite experiences that inspired you to keep pushing forward?

Winning the hackathon was the first time where the team realized there was true demand for the product. Since then the support from the Solana team and community has been one of the most amazing experiences for our team. It’s hard to imagine that other crypto ecosystems are this tight knit.

7. What would you say the team is most excited for over the coming months?

PsyOptions V1 launch!! Well we have to say that!

We’ve got some really exciting ideas around DeFi, stake pools, and even some things in stealth. A lot of that will come full circle to help the PsyOptions DAO become a fully decentralized and sustainable organization.

We hope you enjoyed the interview!

We would love to continue having these kinds of conversations with all the incredible teams building on Serum and sharing them with you. Just let us know who you want to read about next!

You can keep up with the PsyOptions team through their Twitter, Telegram, Discord, Blog, and of course, their website.

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Serum Stories is a community driven initiative that aims to showcase teams behind some of the up and coming projects on Solana

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Project Serum is a decentralized liquidity infrastructure protocol. Learn more at https://projectserum.com

Serum Stories

Serum Stories is a community driven initiative that aims to showcase teams behind some of the up and coming projects on Solana