New Order Size Limit System
Hello UniDex traders! We wanted to make this short article covering the update you'll be seeing live on the terminal today. This update completely refactors how users can size into their positions and reworks the limits on the platform. We’ve been talking about this update for quite a while so let's dive into the update.
Warning! This update will be pushed live today as we’ve warned multiple times in the past. Plan your trades accordingly…
Our current system is manually configured, small order size limit, that is derived it's limit from the total pool value. Then, there is also a larger account-based transaction limit which also stems from the pool value. This was mostly done as a throttle to gauge the sustainability, risks, and future implementations going forward on how WE want to enter and dominate the perp scene. We believe now is a good time to transition into the best model to manage position risk being open interest caps.
The new open interest cap system works like this. Each side of the trade for each pair has a certain global limit for the maximum value positions that can be opened. This number is shared between users so making new accounts or multiple transactions won't allow you to enter a larger amount than the protocol wants. Let's run through a scenario using the FTM pool…
UNIDEX POOL = 100 FTM
SOL-USD open interest cap = 40% ( 40% of longs and shorts )
SOL-USD current open interest = 10 FTM long / 40 FTM short
Alice has 100 FTM and wants to open a SOL-USD long however, the maximum number Alice can enter is 30 FTM.
This is because the cap is 40% of the TVL which is 100 FTM, so only 40 FTM worth of positions can be entered. Note that there is already 10 FTM open so Alice can use the remaining 30 FTM left to max out the pair cap.
Alice has 100 FTM and wants to open a SOL-USD short however, the maximum number Alice can enter is 0 FTM. This is because the maximum cap has already been reached for short positions at 40 FTM.
This doesn't make the risk poolers take increase, and we actually think this will decrease the risk. Not only does this allow more volume on more high liquidity and activity pairs like BTC-USD, but it also will allow more risk management for extremely speculative trading pairs. Overall the protocol will still accept the same net positions on both sides but now offers more control for new pairs and existing pairs.
We hope traders will enjoy the new update and let us know your experience.
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