2022’s First! FTX's New IEO DeFi American Options: PsyOptions, New Rules Favor Retail Investors

FTX announced the launch of its first IEO of the year, PsyOptions, and later released further details on the 5th. Unlike in the past, the threshold for FTT staking to participate in the IEO has been significantly lowered, allowing more investors to take part.

FTX introduced the first IEO of the year, PsyOptions. According to information on the official website, PsyOptions is a "American Options Protocol" based on Solana. Users can buy/sell options to trade a particular asset at a specified price in the future.

There are slight differences in the rules for participating in this IEO, with a significant decrease in the staking amount.

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IEO Auction Rules

According to the FTX subscription page, this IEO will start from 9:00 PM to 10:00 PM on January 18, Taiwan time. Participants must stake 150 FTT and pass Level 2 KYC at least 24 hours before the start to qualify.

The total number of subscription tickets for this round is 2,000, with each ticket representing 5,000 PSY tokens, totaling 10 million PSY tokens. The minimum subscription price per ticket is 500 USDT, and the maximum is 600 USDT + 5 FTT.

Participants need to create a sub-account named "PSY-IEO" and transfer the subscription funds to the sub-account. If the subscription is successful, the funds in the IEO account will be converted into PSY tokens within a few hours. In case of unsuccessful subscription, the funds will be fully refunded, and the FTT subscribed in this round will be completely burned.

The auction rules are as follows:

• Stake 150 FTT or more before 9:00 PM GMT+8 on January 17 and pass Level 2 KYC on FTX
• Create a sub-account "PSY-IEO" and transfer the subscription funds
• The minimum subscription price per ticket is 500 USDT, and the maximum is 600 USDT + 5 FTT (the latter is recommended)
• Stake more FTT to qualify for more subscription tickets

What is PsyOptions?

PsyOptions is a DeFi protocol for American-style options based on Solana. The main difference between American and European options lies in the "exercise date." American options can be exercised at any time before the expiration date, with settlement occurring one to two days after the exercise date.

PsyOptions operates on the secondary market using SPL tokens. Users must collateralize the full target asset to mint two types of tokens: OptionToken and WriterToken.

OptionToken represents the actual contract, granting the holder the right to convert the tokens into assets at the "agreed exercise price," but without the obligation to do so; WriterToken represents selling the option short, allowing the holder to exercise the redemption right at any time before expiration and reclaim the assets.

Options have four main characteristics: 1. High leverage, high risk, high reward; 2. Long or short positions can be taken; 3. Option buyers must pay a premium (margin), with limited risk and unlimited profit potential; 4. Sellers must fulfill the contract, with profit capped at the sum of the buyer's premiums, high win rate but unlimited loss potential.

In the financial market, each trader has a different view, and options satisfy the needs of all traders. For example, if Xiaoming believes that the future will rise significantly and the probability of a decline is low, he can sell put options.

PsyOptions protocol is open, with no preset position on option assets, pricing, or trading methods, allowing users to develop different options based on their needs, such as NFT property division or equity tokenization, providing users with more flexibility to create different strategies for various assets.

Furthermore, to accelerate the initial development of PsyOptions, providing liquidity for options is crucial. According to the official whitepaper, the PsyOptions liquidity mining program will reward market makers and charge a few basis points in fees during trading, option creation, and redemption, creating a supply-demand cycle for tokens and establishing a token economy loop.