Trading

What conditions should I meet before participating in trading?

Leveraged trading is a type of trading that comes with certain risks, and we recommend that experienced traders engage in this type of trading. There are no specific requirements for participating in trading, but for the safety of your funds, we suggest that you have experience in leveraged trading on traditional exchanges.

Why are traders from certain regions prohibited from participating in trading?

We comply with all national laws and regulations. Based on compliance considerations, we prohibit traders from certain countries from using our platform.

Is the system using cross-margin or isolated margin?

Currently, we only support cross-margin mode that all positions share one margin account. The profit and loss of all positions are aggregated into one account for calculation. For the specific rules of the cross-margin, please refer to the instructions of a centralized exchange.

What is PCF (Position Change Fee)? Why is there PCF when opening/closing a position?

The position change fee is a fee generated when the position changes (opening/closing), which may be paid to or received from the system. This is a fee unique to Derify that applies to the AMM mechanism and replaces the funding fee in traditional perpetual contracts. The design concept of the position change fee is similar to that of the funding fee, both of which are designed for risk control of the system. However, the position change fee occurs when the position changes (opening/closing), rather than during the holding process like the funding fee. Generally, if a transaction will increase the system's naked position, the system will penalize the user by charging a position change fee; if the transaction will reduce the system's naked position, the system will reward the user by paying a position change fee. The mechanism of the position change fee can incentivize arbitrageurs to reduce the system's naked position, thereby controlling the risk exposure of the system. For more information on the principles and introduction of the position change fee, please refer to PCF (Position Change Fee)

Will my large trades experience slippage?

We do not have a price discovery mechanism, and the index price provided by the oracle at the time of your trade is your execution price, regardless of the size of your trade. Depending on the specifics of your trade, you may receive or pay a position change fee to the system.

Will there be price manipulation causing needle movements?

As our prices are entirely provided by oracles (currently mainly Chainlink), the prices provided by the oracles are index prices, mark prices, and transaction prices. Therefore, the prices will not be changed due to insufficient liquidity or artificial manipulation.

How long does it take for me to make a transaction??

Our transactions are executed on the chain, so the execution speed depends on the block generation speed of the chain. BNB Chain averages 3 seconds per block, so our transactions are completed in about 3 seconds.

What happens if I open multiple positions in the same contract?

Multiple positions in the same direction will be merged into one position, and the merging will correctly calculate the new position status. Multiple positions in different directions will be displayed separately, and the system supports both long and short positions.

What fees are incurred during the trading process?

Normal opening/closing transactions will incur a trading fee, position change fees (may be paid or received, depending on whether the transaction is expanding or reducing the system's naked position), and gas fees (on-chain execution fees, depending on gas prices and the complexity of contract execution).

What is ADL (Automatic Deleveraging)? Why there is ADL?

ADL happens when a user's margin is lower than the maintenance margin rate but greater than the forced liquidation rate, the system automatically closes part of a user's positions. It makes the margin rate [1] return to a relatively safe value. Through ADL, a user's margin rate can be increased, and the purpose of ADL is to prevent forced liquidation.

[1] regarding the margin rate, please refer to the system parameters

What are the rules for the ADL?

When the user's margin ratio is lower than Maintenance Margin Ratio and higher than Auto-Liquidation Margin Ratio（Maintenance Margin parameter check: Dictionary), ADL will be triggered. For the purpose of deleveraging, the liquidator will liquidate part of the user's positions, so that the margin ratio will return to 2 times the maintenance margin ratio (system parameters). If a user holds multiple positions, ADL is executed in the following order: BTC>ETH (sorted according to the order of the system trading pairs), and the same token will be prioritized to reduce the positions in the direction of the system naked position.

For instance, the system naked position of BTC is long, and the naked position of ETH is long. At this time, Alice holds a BTC long position of 2,000 USDT, 3,000 USDT airdrop, the ETH long position of 3,000 USDT, and the margin rate is only 2.5%（If the Maintenance Margin Ratio is 3% and Auto-Liquidation Margin Ratio is 1%). So, ADL is triggered, then the liquidator will liquidate Alice's position of 4,763 USDT (formula details). First close 2,000 USDT of the BTC long position, and then close 2,763 USDT of the BTC short position.

What is forced liquidation and what are the consequences?

Forced liquidation is when a user's position margin rate is lower than the forced liquidation margin rate, the system liquidator automatically closes all of his or her positions. When forced liquidation occurs, a user's position and account margin balance will both become 0. There may be two possible situations:

1. After forced liquidation, the user's account still has margin. The remaining margin will be automatically injected into the insurance pool

2. After forced liquidation, the margin balance of the user's account is negative, also known as a futures trading margin call. The system will automatically compensate the loss, and the user does not need to pay the debt

How are limit orders (limit orders, take-profit & stop-loss) and liquidation (ADL, forced liquidation) triggered?

Limit orders and liquidation orders are both passive trading behaviors that meet the order/liquidation conditions due to price changes. Such orders are all executed by the system liquidator. Liquidator needs to pay a gas fee as an execution cost in the blockchain world. To incentivize the liquidator, a fee needs to be deducted from the executed margin account as the liquidator's income. The system will pay 1.5 times the gas fee paid by the liquidator (Liquidation Reward Gas Fee Multiplier: Gas Fee = Propose Gas Price * Gas Used). Refer to the system parameter: https://docs.derify.finance/getting-started/dictionary

Therefore, the triggering of limit orders and liquidation generally requires a higher Gas Fee than normal transactions.