Trading
Trading Frequently Asked Questions about Deri Protocol

General

What is the difference between Main, Inno & Open Zone on Deri Protocol?

We have different zones on Deri Protocol.
1.The Main Zone zone features base tokens and trading symbols that remain long term as demand is quite high
2. The Inno Zone marks base tokens & trading symbols that will be evaluated and added by team in regard to their innovation or the brisk request by the Deri community. When the demand and volume proves to be high in longer terms, they will be moved to the Main FUT Zone.
3. The Open Zone (=Permissionless markets) is an environment, where any project can list its base tokens and trading symbol, similar to Uniswap where projects or individuals can create pools, just for derivatives. As the Open Zone is permissionless, Deri Protocol don't control the trading pools at all. Therefore, it is important that traders or liquidity miners familiarize themselves with the Open Zone scheme to avoid any possibility of harm, especially but not limited to - the loss of funds.

Which derivative should I trade? Everlasting Options or Perpetual Futures?

The rationale between choosing between Futures & Options is: what kind of risk you are willing to take/hedge & what kind of costs you are willing to pay. The advantage of futures is that the funding fee is pretty small (fluctuating around 0). Let’s say you are long BTCUSD, you make profits when BTC goes up, whereas you bear a loss when it goes down. The risk profile is symmetric. However, let’s say you are long some out-of-money BTCUSD option with the strike at 50000. The risk profile is asymmetric: you make profits when BTC goes above 50000, whereas you have just a little loss when it goes down. But there is no free lunch. For such asymmetric benefit, you need to pay the option premium, which in the case of Everlasting Options: the funding fees that you need to pay (presumably much higher than that of Futures).

What happens when I open 2 positions in opposite directions at the same time?

You cannot open a long and a short position of the same symbol simultaneously. If you enter a long option and then go short for the same volume of the same option, you end up with an empty position. It’s just like you closed your long position.

How to close a position on Deri Protocol?

Let's assume you have a long position of 10 contracts, if you would like to partially or completely close the position, simply short the number of contracts (no more than 10) you would like to close as if you were entering the opposite position. Likewise for closing a short position.
Lite Interface: A complete closure of the position can be done by clicking the "X POSITION" button on the "MY POSITION" tab.
Pro interface: A complete closure of the position can be done by clicking the "X" below Position info.
When you partially or completely close a position, the part of the unrealized PnL associated with the part of the closed position will become realized - the pool will automatically apply that to your balance (i.e. add or subtract base tokens from your balance).
Please note that even if you completely close your position, your balance will NOT be automatically refunded to your wallet address. To have your balance refunded, simply WITHDRAW your balance. The withdraw button depending on whether you use the Lite or Pro Interface can be found on Position Info/My Position. Also please note that when you close your position and withdraw your fund, the position token (the DPT ERC721) in your wallet will become empty but stay. Next time when you open a position, the same position token will be used.

If I have positions in several symbols of one trading pool, would the total margin requirement be calculated for all of my positions?

Yes, should you have positions in several symbols of one trading pool, a total margin requirement would be calculated for all of your positions. Please note accordingly, forced liquidations are executed on the account level too. For more information check out the question: What happens if I do not meet my maintenance margin requirements? Will my position get liquidated?

What happens if I do not meet my maintenance margin requirements? Will my position get liquidated?

To maintain those positions open, traders have to keep a certain percentage of the position's value on Deri Protocol, which is called "Maintenance Margin". The minimum Maintenance Margin requirements can be found on the Contract Info panel on the trading interface. If the Maintenance Margin requirement is not met, the position will be liquidated and your margin balance will be permanently lost. You can avoid this by adding additional margin.
Please note that we calculate the margin requirement on the account level. That is, should you have positions in several symbols of one trading pool, a total margin requirement would be calculated for all of your positions. Accordingly, forced liquidations are executed on the account level too. That is, upon forced liquidation, all of your positions in this pool will be closed and you will lose all of your margin balance in this pool.

Would I lose some or all of my margin balance in the event of a forced liquidation of my account?

In that case, you would lose all of your margin balance, i.e. your margin balance would become 0.

Are unrealized profits and losses and fund fees deducted and added to the dynamic balance in real-time?

Yes, they are counted in the real-time dynamic balance.

What is Funding Fee?

Funding Fee of Perpetual Futures
To balance the two sides of long and short positions, the pool will always apply a funding fee to the majority side (Perpetual Futures). The funding fee mechanism of Deri Perpetual Futures is quite similar to that of the centralized exchanges (e.g. BitMEX). That is, the funding fee is proportional to the spread of the mark price over the index price, i.e. (mark-index). Every second, one long position pays one short position funding fee as below:
F=f(Pi)F=f*(P-i)
​where P is the mark price, i is the index price, and f is the funding fee coefficient.
Note: given
(Pi)(P-i)
is determined by the net position, the funding fee is ultimately determined by the net position. Specifically, when
l>sl>s
, the funding fee is positive (meaning long positions pay short positions), whereas when
l<sl<s
, the funding fee is negative (short positions pay long positions).
This is mathematically equivalent to our funding mechanism prior to V2.1 (V1 and V2). Please refer to this article for the comparison and equivalence between the funding mechanisms of V2 and V2.1.
Funding Fee of Everlasting Options
For each second, assuming the total number of contracts in a long position is L while that in a short position is S. Then every single long contract will pay a funding fee per the following formula:
FundingFeefor1Day=OptionMarkPricePayoff,Funding Fee for 1 Day = Option Mark Price - Payoff,
where
Payoff=max(spotstrike,0)forcallPayoff = max(spot - strike, 0) for call
Payoff=max(strikespot,0)forputPayoff = max(strike - spot, 0) for put
Please note: 1. the Funding Fee is accrued on a per-second basis. That is, a funding fee of (Funding Fee for 1 Day)/86400 is accrued every second.
2. Unlike Perpetual Futures, theoretically the funding fee for everlasting options is always positive (i.e. long positions always pay short positions).

What is the difference between Mark Price & Index Price?

With Deri's DPMM algorithm, when the net position is 0 (the equilibrium state), the mark price equals the index price fed by the oracle. Whenever there is a trade, it pushes the mark price toward the specific trading direction (i.e. a buying trade pushes the price up while a selling pushes it down). The price change due to the trade is proportional to the trade size.
For example, if the current mark price is P and someone places a trade of size x, then the mark price is pushed to P + ∆P, where ∆P = a • x, with a determined by the pool liquidity and the pool parameters. Since mark price is the trading price for a trade of infinitesimal size as of the current state, the trading price of the trade of size x is the average from P to P + ∆P, roughly P ∆P/2. The precise trading price is calculated by the trading cost as an integral from P to P + ∆P
As the trading volume pushes the mark price linearly, the price spread and the mark price are determined by the total net position, as follows:
P/i=a(ls),∆P/i = a(l — s),
P=i[1a(ls)]P = i[1 a(l — s)]
where i is the index price, / and s are the total long and short positions. Thus (1 — s) is the total net position, and a is a coefficient determined by the pool liquidity & parameters.

What do I have after placing an order?

When you successfully place an order, you have a PToken minted to your address on the blockchain. PToken (P for position) is a non-fungible token (NFT) containing your position information: direction&volume, cost, your margin, cumulative funding rate at the minting block.
The PToken is how your position exists on the blockchain. You can send it to another address just like you send any NFT or fungible token (e.g. ERC20 token). That is, PToken is a tokenized position. Or, from a financial perspective, it's a tokenized risk exposure.

What are the Smart Contract addresses of Deri Position Token (DPT)?

The DPT Token is available & active on the following networks with the following smart contract addresses: BSC: 0x2aa5865bf556ab3f6cd9405e565099f70234df05 POLYGON: 0x0757bc621a32b1134ecf2843955b0bbc8ca13ba1

Why is the liquidation price not displayed sometimes?

There are two cases when a “liquidation price” is not displayed:
  1. 1.
    -- / -- : This symbol means the trader will not be liquidated for price move in this direction
  2. 2.
    ?: this symbol means our simple algorithm cannot determine the liquidation price in this (selected) direction. Please manage your risk carefully.

Everlasting Options

Is the Funding Fee charged only once at the opening of a position?

No, it’s not just charged up-front (this is where everlasting options differ from classic ones). It’s accrued per second but is settled every time you take an action (let's say you add some position). The same also applies to the Funding Fee for perpetual futures.

DPMM of Everlasting Options

For everlasting options, the DPMM (Deri Proactive Market Making) mechanism is adopted to carry out trades. For each everlasting option, DPMM takes two inputs from the oracle: the underlying price and volatility. It calculates then the theoretical price (
ii
) for the option (refer to the whitepaper for the math of the pricing).
This theoretical price is used as the starting point of the DPMM pricing. When the net position is 0 (the equilibrium state), the option mark price equals the theoretical price
ii
. Whenever there is a trade, it pushes the mark price toward the trading direction (i.e. a buying trade pushes the price up while a selling pushes it down). The price change due to the trade is proportional to the trade size.

Can the Option Price appear negative?

Theoretically, option price should never be negative. However, there is no mechanism in our DPMM algorithm to stop this scenario. So hypothetically, if there is a huge selling order, it might cause DPMM to give a negative price, under some special circumstances. If that happens, you can buy in to take the arbitrage. That is, you get paid to own an option

How is Option Price calculated?

Please refer to our whitepaper, or this article specifically for everlasting option pricing: https://deri-protocol.medium.com/pricing-continuously-funded-everlasting-options-acf609a06937

How are the Initial Margin Ratio, Maintenance Margin Ratio, Transaction Fee calculated?

It’s explained on the trading page. if you move your mouse over the marked words, within the Contract Info panel, you will see a hove explaining how they're calculated/charged.

Is the trading on Deri Protocol risk-free?

Trading Margins & Contracts on Deri Protocol includes but is not limited to - a high level of risk, and may not be suitable for all kinds of investors. The enormous degree of leverage can work in favor of you as well as against you. Before making the decision to invest using Deri Protocol, you should carefully consider your level of experience, investment objectives and risk appetite. There is a possibility that you may lose part of your investment or all of your initial investment. You should be aware of all the risks associated with trading contracts and margin. Deri Protocol will not be responsible for any losses, damages or claims arising from events falling within the scope of the events mentioned above. We urgently advise you not to invest money that you cannot afford to lose and we also recommend you to seek advice from an independent financial adviser, If you have any questions or doubts!
Last modified 27d ago