Introducing Tap Finance
Hello World — We’re excited to share more details about Tap Finance, an automated options strategy vault built on Solana.
Our Vision at Tap Finance is to offer sustainable yield for single token assets through options strategies to the Solana Ecosystem.
Over the last three months, Tap Finance has been building the infrastructure and partnerships to launch on Solana Devnet. We’ve partnered with PsyOptions for our initial vaults to mint composable on-chain options. We’re also working with some of the largest market makers in the crypto options space to provide deep liquidity for our options.
These partners will ensure that yields can be generated for our end users safely and consistently.
Why Solana?
Solana offers a unique opportunity to lower the barrier of entry for any user, regardless of how much capital they have, to participate in DeFi. The fundamental primitives of a complete financial system are nearing completion, though some key pieces are still missing. Tap Finance will add to the Solana ecosystem to fill those gaps by creating structured yield generating products.
Our Initial Product
Our initial vault will run a USDC-collateralized BTC Put selling strategy. Users can provide USDC to Tap’s vaults, that will then be used to mint out-of-the-money BTC Put options through PsyOptions on a weekly basis. Those Puts will be sold for USDC either to market makers OTC or through PsyOption’s Serum-integrated order book.
Since the options are far out-of-the-money and their tenor is weekly, they generally will not be exercised and all the USDC from their sale will be distributed to the vault users, thus generating the weekly yield.
Tap Finance uses a backtested model to set the strike price for the Put options. Currently that model predicts yields on USDC which are over 20% APY.
Why Use Options Strategies?
There are numerous ways to generate yield on your assets in DeFi. Some of the most popular methods are staking, LP pairs, or lending. Many of these methods offer sustainable single digit yields. Double digit yields come into play usually through inflationary token mechanics, i.e. distributing protocol tokens to incentive protocol use.
While token incentives are a great way to kickstart the community, they won’t last forever. As DeFi founder of Alchemix, Scoopy Trooples notes “Liquidity Mining is Like a Drug; You Have to Wean Yourself Off it Over Time”.
Our mission is to create sustainable ways for users to generate double digit yields, in both bull and bear markets, without the need to rely on inflationary token distribution.
With Tap Finance, you can expect to earn consistently high yields on your single token asset without ever considering what token you’ll be receiving yield in.
What’s Next?
We’re excited for the road ahead and we have a lot in store for our users. Our Devnet launch will be live within the next couple of weeks and we will invite you all to come give it a try yourself!
In the near term we’ll also enable different strategies, such as covered calls and multi strike price vaults, to provide additional ways for our users to earn yield, based on their risk profile and preferred asset allocation.
As the protocol grows, we’ll be moving towards progressive decentralization — through community governance and automated options issuance. These enhancements will help the community benefit from the protocols growth and create a self sustaining protocol.
There’s a lot more we’re working on to make Tap Finance truly composable in the Solana ecosystem, so stay tuned!
Get Involved
We’re always on the look out for talented individuals and partners who are passionate about our vision. Follow us to stay up to date by following our twitter and don’t hesitate to reach out if interested.
Site: tapfinance.so
Twitter: https://twitter.com/Tap_Finance
