Trading Parameters
We have put measures in place to mitigate the effects of any outliers, designed to aid risk-averse liquidity providers, allowing them to optimize their loquidity strategies and seek stable, long-term returns.
Trade Limiting Parameters:
Max Trade Amount
Max trade amount of max utilization allowed of a pool will decrease as the total open interest of the pool increases. This measures gaurds the BLP against frontrunning using high buy-in. Note: this parameter only affects opening of positions, it will affect positions that have already been opened.
| Asset | Max OI (ARB) | Max OI (USDC) |
|---|---|---|
| BTC/USD | 2000 | 2000 |
| ETH/USD | 2000 | 2000 |
| GBP/USD | 2000 | 2000 |
| EUR/USD | 2000 | 2000 |
| XAU/USD | 1000 | 1000 |
| XAG/USD | 1000 | 1000 |
| LINK/USD | 500 | 500 |
| SOL/USD | 500 | 500 |
| ARB/USD | 500 | 500 |
| BNB/USD | 500 | 500 |
| XRP/USD | 500 | 500 |
| TON/USD | 500 | 500 |
| DOGE/USD | 500 | 500 |
| USD/CAD | 1000 | 1000 |
| NZD/USD | 1000 | 1000 |
| USD/SGD | 1000 | 1000 |
| USD/CHF | 1000 | 1000 |
| AUD/USD | 1000 | 1000 |
Max Trade Size
The maximum trade size adapts in real-time with the pool's liquidity, maintaining proportional trading limits that reflect current market conditions. In case the user tries trading for a greater amount of their partial fill is allowed, then the trade is opened for the max possible values; otherwise, the user is refunded.
Pricing Parameters:
Dynamic Pricing
Unlike orderbooks, automated market makers (AMMs) provide immediate liquidity to takers. On Buffer, takers have the flexibility to set their desired payoff. However, makers could potentially be placed under a disadvantageous condition of having to accept traders within the liquidity they provide without much say. To address this, the AMM relies on the takers paying fee to the makers, striking a balance between the two parties.
To further ensure that AMM doesn't deviate from market conditions, the protocol applies a 'dynamic pricing' mechanism that incentivize or penalizes takers market demand and supply, instead of reyling on deterministic formulas. To maintain a positive expectancy to the aim, balance OI across markets. The payouts are adjusted based on on BLP PnL over a 4 week rolling basis.
Advanced Settings:
Partial Fill
Partial fill is an advanced setting that opens a trade using the max possible value within the implemented max trade size limit. If the user tries to buy trade for more than what the pool allows then the contract will place a trade for the maximum possible value and refunds the rest of the fees back to the user.
Slippage
On Buffer, slippage is used as the accepted price movement between when the user initiates the trade and when the trade is actually opened.