Traders
The Trader User Type is the primary market for the Dexodus platform. We need to be thinking of the Traders as the main “customer”, and the majority of actions from the algorithmic capital accrual and expenditure will take place with direct correlation to the Trader User Type.
When Traders enter the Dexodus platform and onboard via wallet connection, they are required to utilize collateral (USDC) in order to trade. In order to facilitate trades, a sufficient amount of liquidity needs to be supplied by Liquidity Providers in the form of USDC.
Outcomes of Trader actions will negatively or positively impact the liquidity backing supplied by LPs, and will be the primary source of revenue and cost to the DXG token and the Dexodus protocol at large.
Traders Actions:
Open Position
Whenever a trader opens a position, they incur a fee. Depending on the type of position, a different fee is incurred. When orders are placed, the gas for the transaction is paid for by the protocol itself through a specialized contract that pays all gas.
Limit Order - Maker Fee
Market Order - Taker Fee
Depending on the type of order made, the fee tier is likely lower, and should be lowered further depending on how much veDXG the user holds. All fees should have an automatic split, regardless of dollar value of the fee rake.
attributed to the Protocol-Owned Liquidity (POL) of DXG_USDC, which will be used for protocol solvency primarily
Fee share program with DXG stakers (TBD if it will be as straight USDC to be claimed by users with xDXG, or if there will be a mechanism to add the value to supplement the xDXG:DXG ratio)
Fees will also accrue to team treasury to be marked as pure revenue which can be used for further development, or for manual additions to backstop liquidity shortfalls for protocol health maintenance
Fees will accrue to gas provisioning for all traders
Additional fees will be taken from Funding rate. Funding rate is a premium or discount to underlying spot price; it is for this reason that the AMM should generally be TOKEN-USDC in an xy=k model, with a Concentrated Liquidity mechanism to help even out the CLOB, while also providing a clearer indication of where funding should be on a block-by-block basis.
Funding rates should have a premium added to them by default (if base funding rate is +/-0.0100% as per CEX’s, then the Dexodus default rate should be +/-0.0110% with the delta being accrued to the POL for supplementary DXG-USDC value)
Calculation on funding should always be from User <> AMM LP. If the User is owed money, it comes from the AMM LP (with the premium always going to POL LP), and if the User owes money, they pay the AMM LP from their open position size (again, with the premium going back to POL LP).
The concentrated liquidity mechanic will allow for an easier calculation of the imbalance of the AMM LP to move the funding rate based on the net positions across the whole protocol.
For example, if there are 50 Traders, and all of them are long on a specific position, the calculation will be the CLOB price vs the AMM LP price and the net difference will be added to the default funding rate so that every funding exchange period, the funding fee taken is added to the side of the AMM LP that is imbalance until it reaches expected equilibrium of 50/50 to stay in line with the xyk principles. If the AMM LP is in imbalance, all subsequent traders to enter a market order will be slipped to bring the AMM LP back in equilibrium.
If there is no AMM LP that is being used, Dexodus is highly recommended to use an Oracle service that points to an AMM LP on a deeply liquid DEX or partner that can be the reference point for the price.
Winning Position
Whenever a Trader closes a winning position, the winnings are made from the provided AMM Liquidity. The AMM Liquidity always serves as the counterparty for every individual trade being made.
Traders closing Winning positions are the primary method wherein the protocol itself will lose money and risk bad debt.
Losing Position
Traders closing Losing Positions will have all losses redirected to the AMM LP.
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