- Create the market
- Manage the market
STEP 1: Create the market
There are 4 steps to successfully create a perpetual market.
First Step: Select Shared liquidity pool
1.Create a new liquidity pool: please select your collateral by searching its token address. By checking the box below, you are choosing to skip the LP voting procedure when adding a new perpetual to this liquidity pool. This might affect LP’s evaluation of the risks of the pool when adding liquidity.
2.Create a new perpetual market over one of the liquidity pools you have created before:
please select the 2nd option and you would be able to see your existing pools in the shown format.
Second Step: Select Oracle
Two key features when choosing oracles that you need to consider:
1.Price deviation
2.Security
Based on the perpetual market you would like to create, you can either choose from the registered oracle list or use a custom one. If there is no available oracle for your underlying asset, you can search in the oracle market or request one by making a post there.
Third Step: Set Contract Parametres
In this step, you will fill out several figures regarding the basic feature of the perpetual market, including initial margin, maintenance margin, liquidation penalty and insurance fund, and fee related figure including Operator fee, LP fee,Keeper gas reward and referral rebate.
Fourth Step: Set Risk Parameters
Below is the 3D visualization of the market, which shows the pricing strategy when AMM has different positions(long positions, short positions, 0 positions).The green plane represents the price when AMM longs and trader shorts, while the red plane represents the price when AMM shorts and trader longs.
The pricing strategy follows two principles:
1.The goal is to balance between LP’s privilege (AMM’s risk) and trader’s privilege.
2.LP’s risks come from the positions that AMM holds. The pricing strategy itself encourages AMM to hold less position in order to reduce LP risk. The way how this “tendency” works is by having AMM make discounts such that traders get a favorable price (within a certain range). Here we would like to present you a 3D visualization of the market. The green plane represents the price when AMM longs and trader shorts, while the red plane represents the price when AMM shorts and trader longs.
There are 6 risk parameters that you could fill out for managing your perpetual market.
1.𝛼, 𝛽1, 𝛽2
𝛼 is the half spread
𝛽1 is the slope of the curve of price vs position size in the image below when AMM open positions
𝛽2 is the slope of the line in the image below when AMM close positions
Larger 𝛽1 and 𝛽2 means larger slippage. By inputting figures in the blank, you will see how the price curve moves.
2.𝛾:
𝛾 is the max funding rate. A big 𝛾 will result in a big funding payment. We recommend setting this value to be within the range of 0.5%-10%.
3.𝜆
𝜆 is the max leverage that the AMM can have. AMM can be regarded as a normal trader and has its own margin account and position. When AMM position’s leverage hits 𝜆, it will not be allowed to trade if the trade will make its leverage larger, so as to say, AMM will stop trading as counterparty when max leverage is achieved.
In the image below, you can see howf 𝜆 changes the market
4.𝛿
𝛿 is the close discounts. When AMM closes positions, its closing price will be limited to +-𝛿 of index price.
𝛿 is to avoid lost of LPs in extreme situations. We suggest using the recommended 5%.
STEP 2: Manage your perpetual contract:
After you have successfully created your pool, please make sure that you check in every ten days to maintain your operator status. Otherwise you will be fired and a new operator will be elected through a voting process by 1% LP token holders.
If you would like to manage your perpetual contract, please go to the “pool” page, and enter the perpetual market you have created. In the “Perpetual Contracts” section, you will be able to get in the “Perpetual Info” page and modify the risk parameters within the range set previously.
Comments
0 comments
Please sign in to leave a comment.