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Liquidity Flow Case-study

An example of a liquidity flow as we imagine how it could be implemented in cloverfield, based on how it was done in cloverfield testnet by the team while running a test hedger operation.

The values provided are real-live values from our tests in march/april:
Let me walk you through the flow of our current Hedging MVP on
  1. 1.
    LP deposits USDC into an on-chain contract.
  2. 2.
    LP Software streams quotes (that it got from scanning the Binance order book) to Cloverfield.
  3. 3.
    A trader visits Cloverfield to requests a trade via an INTENT.
  4. 4.
    LP software reads the event of his request & lock his quote with an on-chain Tx
  5. 5.
    LP software opens a countertrade on Binance.
  6. 6.
    Then, LP software fills the locked quote from the user on-chain.
We are completely delta neutral. We generate profits by charging the user more on-chain than we pay off-chain.
For example:
  1. 1.
    The user wishes to go long on BTC for $10,000.
  2. 2.
    The current price on Binance is $27,500,
  3. 3.
    MarketMaker quoted the user on-chain at $27,775.
  4. 4.
    MarketMaker earns the difference in PnL.
  5. 5.
    The same applies to funding rates:
  6. 6.
    MarketMaker pays 10% yearly funding on Binance,
  7. 7.
    MarketMaker charges 20% onchain.
  8. 8.
    MarketMaker earns the difference in funding.
And this is only a simple structured product the first MarketMaker created on top of SYMMIO; Rasa could also hedge itself using spot markets and don't pay any funding or use futures contracts possibilities are endless; the opportunity to capture the on-chain derivatives market is now.
Despite earning on higher spreads and fees, MarketMaker offering via SYMMIO remains competitive with GMX, Gains, and DyDx.
Markets on-chain are still inefficient. This presents an opportunity for a liquidity/spread/funding arbitrage between on-chain and off-chain.
All rights to the people (c) 2023 Symmetry Labs A.G.