Universal Margin System

Long short anything, unified liquidity

At Derivio, any market can be open as long as the tokens are listed in the pool. For instance: ETH-BTC, USDC-USDT, UNI-ETH, CRV-UNI, stETH-ETH, etc. (subject to change).

This gives traders many more exotic choices for making bets. The liquidity pool remains exactly the same and aggregated, so there is no fragmentation of liquidity. Additionally, it eliminates the fragmentation / problem of stablecoin depeg.

Derivio’s margin system views all tokens the same: if you are longing ETH-BTC, you are shorting BTC-ETH. Traders deposit the “long” token, and equity is accounted in the “short” token.

To give concrete examples:

  • A trader can use ETH to enter a long position for ETH-BTC market: the equity/PnL is accounted in terms of BTC and paid out in ETH.

  • A trader can use BTC to enter a short position for ETH-BTC market: the equity/PnL is accounted in terms of ETH and paid out in BTC.

(For both deposit and payout, the trader can swap from or into any other token in the pools.)

Use Cases:

For any two tokens in the same pool, two markets can be created between those 2 tokens.

Example: The creation of ETH-BTC and BTC-ETH perp markets (notice those 2 markets are different — to understand this: the PnLs are calculated in terms of BTC and ETH respectively). Currently markets are white-listed in Derivio's UI. In the future users can input any base/quote token pair they prefer.

Take for example CRV-UNI perp. Once added to the pool, Derivio will be the only place you can long/short one against another, unique across all CEXs & DEXs. Under “traditional” circumstances, if a trader wishes to secure a long position on CRV and a short position on UNI using perpetual contracts, they would have to operate on the CRV-USDT pair and the UNI-USDT pair respectively. However, this conventional method of synthesizing exposure requires constant calculation and rebalancing of their position to maintain the desired leverage. This continuous adjustment can be complex, hard for users to understand and lead to a huge burden of fees. Derivio's Universal Margin System pushes the capital efficiency and liquidity depth to the next level. Additionally, there is no liquidity fragmentation problem because those markets don't need any separate orderbook with exotic market makers.

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