Trading

Trading Frequently Asked Questions about Deri Protocol

General

How much gas is consumed to do things with Deri?

Deri protocol is reasonably gas-economic. Most of the actions cost around 100,000 gas per action. The most expensive action is trade-with-margin, a combined action of trade and post margin, that costs around 200,000 gas per action. If you are to trade frequently, it is encouraged to post sufficient margin to your position (i.e. your pToken) and carry out "simple trades" without adding/removing margin every time, which would cost around 100,000 gas per trade. If you do not have a clear sense about how much 100,000 gas is, this is for your reference: the minimum gas consumption of a single transaction on ETH blockchain is sending ETH, which costs 21,000 gas per transfer, while a common basic transaction like sending ERC20 token (e.g. USDT or DAI) costs around 40,000~60,000 gas. That is, a single operation with Deri consumes only around twice as much gas as a simple transfer of ERC20 token.

I don’t know which to use, Everlasting Options or Perpetual Futures, is there somewhere that can show me the costs of each?

The rationale between choosing between Futures & Options is that, what kind of risk you are willing to take/hedge & what kind of costs you are willing to pay. The advantage about 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 loss when it goes down. The risk profile is symmetric. However, let’s say you are long some out-of-money BTCUSD option with 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.

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.

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.

Is the dynamic effective balance a full margin?

Yes, the dynamic effective balance a full margin.

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) For each ETH block, 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 = FundingRate*ContractValue, per the following formula. Whereas every single short contract will receive a funding fee = FundingRate*ContractValue. FundingRate = r*NetPositionContractValue/PoolLiquidity =r*(L-S)*CurrentPrice*Multiplier/PoolLiquidity where r is the funding rate coefficient, and ContractValue is ContractValue = CurrentPrice * Multiplier Please note that when L>S, FundingRate is positive (meaning long positions pay short positions), whereas when L<S, FundingRate is negative (short positions pay long positions). 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:

Funding Fee for 1 Day = Option Mark Price - Payoff, where Payoff = max(spot - strike, 0) for call Payoff = 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, the funding fee for everlasting options is always positive (i.e. long positions always pay short positions).

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 (Ethereum, BSC, or HECO). 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?

There are two cases when a “liquidation price” is not displayed:

  1. -- / -- : This symbol means the trader will not be liquidated for price move in this direction

  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? Or after every block similar to perpetual futures?

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). It’s similar to Perpetual Futures, the only difference is the funding of Perpetual Futures is accrued per block.

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!