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Given the fact that Hedgers and Counterparties play a crucial role, why is the SYMMIO system still free of trust assumptions?
Streamlined disputes available in SYMM v0.82: Oracle-Based Force Close The current version of SYMM v0.82 allows for Oracle Based Force closing to solve situations where Hedger does not respond to a users Close request: Section IV. - FC (oracle)
SYMMIO is at the forefront of revolutionizing decentralized, permissionless derivatives by combining Intent-Centric matching with bilaterally settled OTC derivatives.
As this novel approach aspires to redefine on-chain derivatives trading, there may be reservations among those not deeply acquainted with the system's architecture, especially concerning trust when dealing with hedgers and counterparties.
This section delves into the meticulous design of SYMMIO, which is crafted to eradicate any trust assumptions between users and hedgers via streamlined disputes.
Trustlessness, by definition, means that one does not have to rely on trust or faith in another party to transact or interact securely. For SYMMIO, this is manifested by its approach towards the relationship between the User and the Hedger. Instead of relying on trust between User and Hedger, the system is engineered so trust is not required. That is especially true given that Hedgers potentially operate with off-chain components to hedge themselves. Still, the onchain contract between the User and Hedger is immutably shielded from any or all hedger operations outside the system.
Four main pillars sustain trustlessness within the SYMMIO system:
- 1.BILATERAL: Hedgers and users are bilaterally and immutably locked into a trade. There's no backdoor or special treatment for hedgers; both parties are bound once engaged.
- 2.USER-CENTRIC Design: Hedgers cannot prematurely close a trade, they can only sell or transfer it to another party. The ability to initiate a close request lies solely with the User.
- 3.PEER TO PEER: The protocol operates purely on a peer-to-peer assumption, emphasizing the ethos of decentralization. In SYMMIO, the P2P nature is mainly expressed how both parties are treated during their insolvency. If a hedger fails to provide sufficient collateral, they are treated equally as the User and risk their liquidation.
- 4.Economic Incentives through punishable DISPUTES: A hedger is compelled by design and economic incentives to honor a user's closing request. If they don't, they face the potential consequences of a streamlined dispute (current version: oracle force close).