⛺Intent Based RFQ (SYMM)
Last updated
Last updated
Instead of relying on virtual automated market maker pools (vAMM), or a central limit order book (CLOB), both of which execute orders against pre-committed liquidity, users of this product express their trading intentions, which will be executed by external solvers. Liquidity is thus coming directly from market makers, and this process is facilitated by SYMMIO as the Execution Engine.
Architecture Overview
SYMMIO has pioneered the concept of AMFQ (Automated Market for Quotes) perps, or rather, a way to trade perps in an OTC manner directly against a Solver/Market Maker (MM).
Solvers stream indicative trade quotes (bid-offers on all the assets). Users then submit specific quotes, detailing their desired trade size, direction, leverage, and other parameters. In response, the solver decides whether to fill the trader’s order. Upon agreement on price and fees, both parties deposit collateral into the fully audited SYMMIO bilateral trade agreement contract. This contract is akin to a peer-to-peer OTC trade, which is subject to liquidation from either side if the collateral isn't maintained. Crucially, this agreement is trustless and symmetric between the counterparties. Only the trader has the authority to ‘close’ the position, barring any liquidation scenarios by third-party ‘keepers’.
Process
Users connect their wallet, deposit USDC into the trading engine, which automatically creates a sub-account for the user. In this example, we’ll be connecting and depositing $100 USDC. Like any other smart contract, you must first approve, then deposit and allocate this USDC to your account.
This will then load the Account Overview, and you’re ready to trade. Details of what each of these parameters mean are in the Account Information - Key Terms and Definitions section of our docs.
A trader submits the trade details (intent) of their desired trade (e.g. long $BTC / short $ETH)
The solver (market maker) provides an offer with conditions for the trade (price, slippage, fees, funding rates, collateral, etc.). This step happens automatically and in real time. No capital is committed by the solver at this time.
Once satisfied with the conditions of the trade, the trader sends a “Request to Trade” to the solver, including locking their required collateral.
The solver then observes the request and chooses to accept it, depositing their equal collateral into the contract.
This forms a “bilateral agreement” between the solver and the trader. It is an isolated and perfectly symmetrical contract, and depending on the price movement of the position, one party is obligated to pay the other party as PnL. This bilateral agreement exists in perpetuity until either (1) the trader closes the position, or (2) one of the parties is liquidated (automatically executed by a neutral third party based on margin health).
The solver can then “hedge” their position exposure (in this example, it would be long 1 BTC) on any number of sources, including a CEX, another DEX, an OTC desk, non-linear options, or even spot holdings. The solver can also net his positions with other positions or with other solvers in the network (future implementation).
Note: Step 8 takes place off-chain and the solver is solely responsible for managing their hedging strategy. Because collateral is locked into the Bilateral Agreement and completely isolated from external factors, users do not have to make any trust assumptions regarding the solvency of the solver on-chain.
Account Information - Key Terms and Definitions
The Account Overview shows you all the relevant information to monitor and manage your risk. This is also where you can Deposit more collateral, or withdraw.
Account Health
Represented as a percentage, it indicates the health of a trader's sub-account.
When the Equity Balance matches the Maintenance Margin, you will risk liquidation.
Formula:
AccountHealth = (EquityBalance - MaintenanceMargin ) / (allocatedBalance - maintenanceMargin)
Equity Balance
A combination of a trader's dedicated account balance and UPNL, this metric indicates the probable future balance.
If it dips to the amount of the Maintenance Margin, liquidation ensues.
Formula: EquityBalance = AllocatedBalance + UPNL
Unrealised Profit and Loss (uPnL)
UPNL showcases potential gains or losses that would result if a trader closed their active position(s).
It's calculated by evaluating the difference in USD terms between the average entry price and the prevailing index price.
Maintenance Margin (CVA)
Considered the trader's "security deposit." If the equity balance (which combines account balance and UPNL) drops to this mark, liquidation is imminent.
This margin is locked and non-transferable, encompassing all open positions.
Allocated Balance
Represents funds assigned by traders for a specific Margin Sub-Account.
These funds can either initiate margin positions or be available for withdraw.
Locked Margin
The Initial Margin feeds into the Locked Margin. The Locked Margin represents margins engaged across all live positions.
While part of a trader's Equity, the Locked Margin acts as a buffer, deterring excessive position openings.
Available for Margin
Denotes the account balance still accessible for Requests and Orders.
Formula: AvailableForOrders = EquityBalance - LockedMargin - MaintenanceMargin
Account Information - Trade example
Let’s build an example, where a user has deposited $100 into the Account.
The user then goes to open a trade that is long MATIC/ short SUSHI for $50 with 3x leverage
Note that because of minimum trade sizes, the locked value is slightly less than $50 ($49.5), the remaining $0.50 remains in the users wallet.
Users can now view their updated Account Overview. Here are the calculations:
uPnL = PnL on open positions
uPnL = +$0.15
Equity Balance = Allocated Balance + uPnL - fees paid ($0.09)
Equity Balance = $99.91 + $0.0218 = $100.064
CVA = Set aside by the Solver for each trade (and thus varies)
CVA = $3.16
Locked Margin = The initial $50 that was used to put on the trade - CVA - fees - uPnL
Locked Margin = $50 - $3.16 - $0.09 - $0.15 Locked Margin = $46.6
Available for Orders = EquityBalance - LockedMargin -MaintenanceMargin
Available for Orders = $100.06 - 46.6 - 3.16
Available for Orders = $50.3
Liquidations
A liquidation event occurs when a trader's account and positions are forcibly closed by a liquidator due to insufficient margin in their account to cover unrealized losses.
This happens when the trader's positions move against them to the point where the Equity Balance falls below the Maintenance Margin (CVA).
In the event of liquidation, the entirety of the account CVA is paid to the Solver.
Warning: Accounts a Pear x SYMM operate in cross-margin. Meaning Equity Balance takes into consideration the entire account balance, and liquidations will result in the entire account balance to be lost. Users can create isolated sub-accounts to better manage their liquidation risk.
Technical Information
We use a Binance API to pull in data for the charts and other elements. A list of restricted countries is available here: https://www.binance.com/en/legal/list-of-prohibited-countries
