Variable Fees For Lower Tenor Option Minting

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Hi PsyOptions Community - We’re working on an option strategy vault (Tap Finance) that will mint options at weekly epoch intervals and sell them to generate yield for our users. With our current strategies, our models predict roughly 30-40 bps of yield per epoch.

Given Psyoptions has a flat 5bps minting fee, a non-trivial portion of our yield will be diverted to pay for fees, reducing attractiveness of the vaults for users.

Can we propose/discuss a variable fee model based on tenor of options? Open to suggestions, but a simple proposal could be:

  • Options Tenor <= 1 week → 2 bps
  • Options Tenor = 1 week - 4 weeks → 4 bps
  • Options Tenor > 4 weeks → 5bps

Pros of this approach:

  • Incentives options minting at shorter tenors thereby increasing protocol volume
  • Unlocks more advanced option strategies utilizing variable tenors and hedging

Potential Cons:

  • Reduced Fees (can be offset with increased option minting)
  • Development Effort

Would love to hear the team and communities thoughts on this. Ultimately we want to provide the highest yields possible to users so that both the Tap Finance & PysOptions ecosystem can grow.

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I’m for reducing minting fees significantly. I like this idea!

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minting fees should be 0. more leaves way much incentive for a community fork

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Totally agree that fees should be negligible in the short term but disagree with the reasoning. For one, no one is going to use a fork to avoid a 10 bp fee for example. Plus even if someone is extremely determined to get the best execution possible, the aggressiveness of the liquidity providers is a far more important factor.

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