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. LP deposits USDC into an on-chain contract.

  2. LP Software streams quotes (that it got from scanning the Binance order book) to Cloverfield.

  3. A trader visits Cloverfield to requests a trade via an INTENT.

  4. LP software reads the event of his request & lock his quote with an on-chain Tx

  5. LP software opens a countertrade on Binance.

  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. The user wishes to go long on BTC for $10,000.

  2. The current price on Binance is $27,500,

  3. MarketMaker quoted the user on-chain at $27,775.

  4. MarketMaker earns the difference in PnL.

  5. The same applies to funding rates:

  6. MarketMaker pays 10% yearly funding on Binance,

  7. MarketMaker charges 20% onchain.

  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.

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