- This topic has 1 reply, 2 voices, and was last updated 8 months ago by Plz_educate_me.
- Thursday, March 31st, 2022 at 19:49 #205752ShamusjParticipant
I was initially excited about the side chain dex and the yield farming prospects but now have some doubts about the transparency of the team.
I’m specifically talking about their announcement of a so-called “Call Option” which you can obtain in exchange for 100 of their yield tokens (Myield).
Now I’ve been neck deep in the capital markets for over 20 years so I know my calls / puts / spreads / Greeks inside out.
I get the feeling (based on how hard it is to find the answer from anyone on their discord) that their mislabelling of their call option was intentional in order to drive the price of Myield higher.
The prevailing function of a call option derivative is to give the owner the right to buy 100 of the underlying instrument at a fixed price ( in this case Milk tokens for 1 ADA). The team do not answer direct questions on whether their call option gives you the right to buy 100 Milk or 1 Milk. Because you swap 100 Myield to obtain the call option, it gives the user the impression that the call option is a standard right to buy 100 milk. However I now believe it only allows you to buy 1 milk. This drastically reduced the value of an Myield token to something like 0.04 ADA.
Why do I think the misdirection was intentional? Because something so basic and fundamental as defining how many units of Milk does one call option entitle you to has not been answered in their twitter or Discord platforms.
What purpose might it serve?
Well the price of Myield shot up to 8 ADA and the only possible reason that it might seem to be worth that is because the market was led to believe a call option entitles you to 100 milk. Since you have to trade 100 Myield for 1 call option, it would lead the market to believe 1 Myield is worth 1 milk discounted to 1 ADA. Since Milk is worth 4 ADA then it’s reasonable to attach a premium of 3 ADA to each Myield (since the option allows purchase at 1 ADA). Hey presto, the market priced Myield at about 7ADA.
I suspect some insiders got rich from this scam and it has left a very sour taste in my mouth.
I’ll be sticking with Milkyswap milkomeda farming from here as the yield tokens do not have this kind of misdirection on the tokenomics.
Currently, the most transparency I’ve seen has been from Wingriders, Minswap & Sundae.
Transparency and trust go hand in hand.Thursday, March 31st, 2022 at 19:49 #205753Plz_educate_me
Thanks for this write up! Hope Muesliswap can provide clarity on what these call options actually are
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