faq

Possum Finance is a decentralized finance (DeFi) protocol that introduces no-loss prediction markets, allowing users to speculate on asset price movements without risking their staked capital.

Users stake PSM tokens in a Signal Vault and make predictions on the direction of an asset's price for upcoming epochs. If their prediction is correct, they earn a share of the epoch rewards. If incorrect, they can participate in the next epoch without losing their stake.

PSM is the native token of the Possum Finance protocol. It serves as the staking asset in Signal Vaults and plays a crucial role in the protocol's economic feedback loops.

In the initial Beta version, the Possum Finance treasury provides the trading capital of the Asset Vault. The main version will contain a permissionless system of some sort that enables scalable capital addition.

Predictions by users are filtered by an algorithm inside the Signal Vault to arrive at the final trading signal for the Asset Vault. It is important to note that users, even in aggregate, don't need to be right for the system to be profitable since the filtered signal can, and often will be the opposite of user predictions. However, in case the trading signal is wrong continuously, the Asset Vault may decrease in value. This can negatively affect the redeem value of PSM. Though, the arbitrage relation between redeem value and market price only works one way: providing a floor price for PSM. In theory, the redeem value (floor price) of PSM can decrease significantly without affecting the market price. That said, the goal of the system is to increase the Asset Vault value over time which requires decent trading signals from the Signal Vault.