Section IV. - FC (oracle)

A deep Dive into the solutions

Oracle FC is short for Oracle Based Force Close

In an ecosystem where timely responsiveness and consistency are critical, what mechanisms does SYMMIO deploy to ensure seamless operations even in the absence of immediate hedger response?

1. The Force Close Model

At its core, the force close is a straightforward mechanism. When a user initiates a trade closure request and the hedger remains unresponsive for a specified duration, the system permits the user to employ a liquidator to terminate the position at the oracle price. The genius behind this model lies in the fact that it fundamentally shifts the dynamics of the trade.

Understanding the impact requires a comprehensive grasp of the CVA (Credit Valuation Adjustment). This feature acts as a security deposit from both parties, serving multiple purposes:

  • Protection for the Hedger: In scenarios where a hedger might have an open hedging trade on another platform, like Binance, and the user faces liquidation, the hedger aims to close their hedging trade promptly to ensure a balance between on-chain and off-chain positions. CVA provides a buffer against potential losses that could arise due to the brief period of exposure during the user's liquidation.

  • Incentive for Liquidators: The CVA acts as both a discount and a motivator for players to intervene during liquidation scenarios, making it a pivotal component of SYMMIO's architecture.

However, force close introduces a different layer of complexity for the hedger. When a force close is enacted:

  • The hedger loses out on the CVA intended to cover potential losses.

  • No spread premium can be levied by the hedger, leading to a direct loss in revenue.

  • The force close does not account for the exact slippage that would arise if the position were sold in a real-time market scenario.

These economic ramifications serve as a natural deterrent for hedgers, pushing them towards consistent and trustworthy behavior. It ensures that only the most efficient and proactive hedgers thrive in this environment.

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