Pseudo-Delta Neutral Hedging Experiment 7: Francium’s Automatic-Rebalancing PDN Vaults

Important Alert: Raydium was exploited on 16 December 2022. Francium’s Automated PDN Vaults (APVs) are unfortunately composed on top of Raydium’s standard Constant Product Automatic Market Maker (CPAMM) pools. While Raydium had stopped the exploit, there remains a lot to be answered by Raydium on how it happened in the first place as the smart contract was not comprised, but rather one of their private keys. Until the protocol can provide more clarity, personally I will not be injecting any liquidity into any Raydium’s pools whether directly or through other protocols.

Preface

Normally, I go straight to my objective, but because it had been a while since I last wrote anything, I thought a little introduction is in order.

Year 2022 has been quite the lousy year for the Solana blockchain or for any blockchain for the matter. It marked the real start of a crypto winter that just gets progressively more wintry with each occurrence of a “black swan” event that surfaced along the way. And these events happen with such abundance during the year that I am not even sure if they can still qualify as “black swan” events?

From the implosion of the Terra Luna blockchain in May 2022 to the subsequent collapsing of various industry heavyweights like 3AC, Voyager and Celsius, these events along with the rising interest rate environment, led to an exodus of capital as well as a general loss of…