Market Creation
Last updated
Last updated
At the launch of the Chromatic Protocol on the Arbitrum mainnet, it commences with one market, USDT-BTC/USD(ChainLink Push).
However, as a decentralized, trustless DeFi protocol, market creators can create various markets by combining separate indexes and settlement tokens. One market can be created for each unique index and settlement token pair combination.
Once someone has created a specific combination of markets, duplicate markets with the same combination cannot be created. This restriction is in place to prevent market fragmentation and inefficiency caused by jumbled-up duplicated markets.
Chromatic Protocol utilizes the non-manipulable external oracle, Chainlink, for its indices. By delegating the price discovery function of the index to an external oracle, Chromatic Protocol does not require its own futures prices or mark prices. Also, it allows focusing on hedging and speculation functionalities of perpetual futures.
The indices of Chromatic Protocol are not limited to cryptocurrencies. Any price feed in the oracle can be used as the index to create markets.
At the launch of the Chromatic Protocol on the Arbitrum mainnet, it commences with one settlement token listed, USDT.
While any oracle-provided price feed can be used as the underlying index, the available settlement tokens listings are determined by the protocol DAO.
Stablecoins such as USDC, USDT, BUSD, as well as other ERC-20 tokens like wETH, UNI, DOGE can be used as settlement tokens.
As described earlier, the settlement token and the underlying index of the market are separated. For example, when creating a market with the ETH/USD oracle price as the underlying index, the settlement token can be any token, including those pegged to USD like USDT, USDC, as well as tokens unrelated to the underlying index like wETH, wBTC.
Currently, Chromatic Protocol has USDT as a settlement token for initial markets. The protocol DAO can determine further listings of settlement tokens available for market creation. Settlement tokens serve as the currency for a settlement. Therefore, listing random tokens as settlement tokens without careful consideration can be dangerous and requires careful consideration.
Below are the adjustable parameters per-settlement token basis and the default settings for USDT-based markets. When the protocol DAO makes decisions on listing settlement tokens, the protocol DAO can also determine these parameters.
Other parameters adjustable by the protocol DAO are described in the Adjustable Parameter by Protocol DAO section.
Settlement token: USDT
Minimum betting amount: 10 USDT
Minimum liquidity add amount: 1000 wei per BIN
Minimum take-profit: 2% in USDT market
Maximum take-profit: 1000% in USDT market
Maximum claim wait: 24 hrs
Once a market creator creates a market, the default settings are applied to the newly created market. These settings can't be changed by the market creator, but can be adjusted by the protocol DAO's decisions according to a set procedure.
Below are the default settings of markets, and the parameters that the protocol DAO can determine on a per-market, per-settlement token, or per-index basis:
Default market direction: Bidirectional
There are 3 market direction types
Long & short
Long only
Short only
Protocol Fee
Default fee rate: 50% of the trading fee.
A portion of the trading fees takers pay to makers can be collected as protocol fees.
Protocol DAO can determine whether to activate the protocol fee per-market basis.
Once a specific market’s protocol fee is activated, a protocol fee rate can also be determined by the protocol DAO.
Leverage Level
The protocol DAO can set the leverage level by choosing a tier for each underlying index based on its risks and volatilities.
Tier 1: max x10
Tier 2: max x20
Tier 3 : max x50
Tier 4: max x100
