Trading
Margin trading has risks, we recommend only experienced traders to participate.
There's no special requirements for traders, however, we strongly advise you to gain experience in traditional exchanges before trading on Derify protocol.
We comply with laws and regulations of all countries and regions.
For compliance purposes, we will restrict traders from certain countries to use Derify protocol.
Currently we only support BUSD.
We will support USDC and DAI soon.
We will also support other assets as collateral in the future.
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 major centralized exchange
PCF refers to a fee incurred when the position changes (position opening/closing), which may be paid to the system or obtained from the system. It is an innovative AMM mechanism created by Derify. PCF replaces the funding fee from traditional perpetual. The design concept behind PCF is somewhat similar to the funding fee. Both are created for system risk control, but PCF occurs when the position changes (position opening/closing), not during the position holding like funding fee. Generally, if a transaction will increase the system naked position, the system will penalize the transaction, so user needs to pay PCF to the system. On the contrary, if the transaction will decrease the system naked position, the system will reward the transaction, and the user will be rewarded a PCF. Through the PCF mechanism, arbitrageurs can be motivated to reduce the system naked position, so as to achieve the purpose of controlling the system risk exposure.
We do not have a price discovery mechanism. The index price provided by the oracle is your transaction price. No matter how big your transaction volume is, the price feed by oracle at the moment of your transaction is used as your transaction price. According to the actual situation of your transaction, you may get PCF reward from the system, or pay the PCF to the system.
Since price is feed by oracle (mainly Chainlink), index price, mark price, and transaction price are the same. Price will not be affected by insufficient liquidity or price manipulation.
Our transactions are executed on-chain, so the speed of execution depends on the block time. The average block time of BNB Chain is 3 seconds, so our transaction is completed in about 3 seconds.
Multiple positions in the same direction will be merged into one position, and the merge will correctly calculate the new position status. Multiple positions in different directions will be displayed separately because our system supports two-way positions.
A opening/closing transaction will incur trading fee (refer to system parameter: https://docs.derify.finance/getting-started/dictionary), position change fee (a payment or a gain, depending on whether the transaction is increasing or decreasing the system naked position), and gas fee (on-chain execution costs, depending on the gas price and complexity of contract execution).
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 return to a relatively safe value. Through ADL, a user's margin rate can be increased, and the purpose of ADL is to prevent from forced liquidation or system serial liquidation.
When the user's margin ratio is lower than Maintenance Margin Ratio and greater 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 of the maintenance margin ratio (system parameters). If the user holds multiple positions, ADL 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 a 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 2000 BUSD , 3000 BUSD airdrop, a ETH long position of 3000 BUSD, 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 4763 BUSD (formula details). First close 2000 BUSD of BTC long position, and then close 2763 BUSD of BTC short position.
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 the forced liquidation, the user's account still has margin left. The remaining margin will be automatically injected into the insurance pool
- 2.After the forced liquidation, the margin balance of the user's account is negative, that is caused by serial liquidation. The system will automatically compensate the loss, and the user does not need to pay the debt
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 blockchain world. To incentivize liquidator, a fee needs to be deducted from the executed margin account as liquidator's income. The system will pay 1.5 times of the gas fee paid by the liquidator (Liquidation Reward Gas Fee Multiplier: Gas Fee = ProposeGasPrice * Gas Used). Refer to system parameter: https://docs.derify.finance/getting-started/dictionary
Therefore, triggering limit orders and clearing generally requires a higher Gas Fee than normal transactions.
Last modified 2mo ago