Perps Trading (Peer-to-Pool)
FWX Perpetual Trading is a decentralized perpetual exchange that enables users to trade a variety of cryptocurrencies with leverage directly from their's deposited balance. FWX Perpetual Trading offers a decentralized trading experience with the added benefits of very low gas fees. This platform is designed to cater to both novice and experienced traders, providing a seamless environment for high-leverage trading with a robust risk management system.
How FWX Perpetual Trading Works
Trading Against Liquidity Providers
In FWX Perpetual Trading's decentralized perpetual exchange, traders open leveraged positions and trade against liquidity providers (LPs) on the platform. The platform operates with a unique dynamic where the liquidity providers act as the counterparties to all trades. This means that every profit or loss a trader incurs is directly tied to the liquidity pool provided by these LPs.
Liquidity Pool: The FWX Perpetual Trading platform is powered by a single-asset liquidity pool, which exclusively holds USDC (USD Coin). Liquidity providers deposit their USDC into this pool, which then facilitates leveraged trading on the platform. By doing so, LPs play a critical role in the ecosystem, providing the necessary liquidity for traders to open and maintain their leveraged positions.
Counterparty to the Trade: As the counterparties to traders' positions, the liquidity providers are directly affected by the outcomes of these trades.
Trader Profits: When a trader makes a profit on a position, the corresponding payout is made from the liquidity pool, thereby reducing its overall value.
Trader Losses: Conversely, if a trader incurs a loss, the loss is absorbed by the trader's collateral and subsequently added to the liquidity pool. This mechanism ensures that the liquidity pool remains robust, and that LPs are fairly compensated for the risk they undertake.
Preventing Price Staling Attacks
FWX introduces "Price You See Is Price You Get" (PYSIPYG), which uses oracle prices from the PYTH Network to facilitate user trading. All user positions are submitted on the blockchain. The protocol allows a 40-second window from the confirmation screen, meaning users must approve the confirmation within 40 seconds to create their positions in Perps Trading.
Based on simulations and our testing with over 1,000 organic users, 40 seconds is sufficient for users to finalize their positions. The price calculation includes trading fees and funding fees. Our tests and the current mainnet performance show that users have a minimal chance of encountering front-running within this 40-second window.
Smart Cross-Margin
When a user opens multiple positions in different pairs, they will notice that the liquidation price may change. FWX introduces the 'Smart Cross-Margin' feature, which allows margin to be shared across different pairs and impacts the liquidation price of the user's positions. The Smart Cross-Margin feature adjusts the margin to prevent liquidation of the user's positions. As a result, the liquidation price will fluctuate over time, especially during periods of asset price volatility. Finally, although the protocol makes every effort to avoid liquidation, if the price exceeds the liquidation threshold, the protocol will liquidate all of the user's positions.
"If the protocol tries its best to avoid liquidation, but the price exceeds the liquidation price, the protocol will liquidate all of the user's positions."
1% Liquidation Margin, 30x Leverage, SAFE User Funds Mindset
FWX calculates the liquidation margin (Maintenance Margin) at 1% (1.5% for 5x leverage pairs). High leverage increases the risk of liquidation, so we have designed the system to minimize the chances of liquidating a user's positions. All users can view position details on-chain, ensuring transparency. No market maker can manipulate prices to trigger liquidation. FWX believes that fair trading in the futures market is crucial, and it is the core principle of our product.
Take Profit/Stop Loss
When traders set TP/SL (Take Profit / Stop Loss) positions, the protocol will charge an additional 0.5 USDC per position when the TP/SL is triggered. Users can submit, cancel, and re-submit TP/SL positions multiple times without incurring any fees. The fee is only charged when the TP/SL position is actually triggered
One-Time Funding Fee
Many futures traders face a high funding fees that are charged every 8 hours at a high rate during periods of volatility. FWX offers a one-time funding fee and this funding fee is calculated based on the Open Interest.
1,000
0%
5,000
0.01%
10,000
0.02%
25,000
0.04%
50,000
0.08%
75,000
0.12%
100,000
0.2%
125,000
0.3%
150,000
0.5%
>150,000
1%
This funding fee is not paid to the opposite side of the trade. Instead, the one-time funding fee is paid to the Perps Vault, which provides liquidity. FWX will open the Perps Vault to allow users to provide liquidity and earn additional one-time funding fees from traders.
Please note that the funding fee table may change from time to time, especially when the protocol experiences high open interest, in order to minimize trader losses as much as possible.
Required Collateral (Minimum Margin)
(Contract Size * Entry Price) / Leverage For Example, user open Long Position in BTC/USD pair with
2 BTC as contract size
Entry Price 100,000 USD per BTC
Leverage 5x
The required collateral is calculated as (2 * 100,000) / 5 = 40,000 USDC. This means that when a user wants to open a long position with a contract size of 2 BTC and 5x leverage, they must deposit at least 40,000 USDC as collateral.
Send Your Position To Other Wallets
All of a user's positions are stored in their NFT membership. Traders can transfer their positions to another wallet simply by sending their FWX NFT membership to that wallet
Liquidation Price
The liquidation price is then calculated from the sustainable loss, which is derived from the Net Balance divided by the contract size, as shown in the figure below:
Sustainable loss is a simulation of the virtual price, calculated using the user's current margin (Net Balance) divided by the contract size of the open position.
The Net Balance is derived from the current margin balance (including PnL). FWX uses Smart Cross-Margin, so the Net Balance remains consistent across all positions that are opened. If the Net Balance falls below 1% of the contract size multiplied by the price, the position will be liquidated.
Perps Vault
80% of the trading fees from Perps trading are directed to the Perps Vault.
100% of the one-time funding fees are also allocated to the Perps Vault.
The Perps Vault acts as the counter-party to traders. It settles PnL (Profit and Loss) based on the outcomes of trades: if a trader incurs a loss, the vault gains the corresponding amount, and if the trader makes a profit, the vault bears the loss.
The maximum open interest all users can have in total is equal 500% of the total liquidity in the Perps Vault. (This is subject to change in the future)
FWX will open Perps Vault to public liquidity ETH, BSE and AVAX C-Chain in 2025
In 2025, FWX will open the Perps Vault to all liquidity providers, allowing them to deposit stablecoins like USDC into the FWX Perps Vault.
The Concept of Positive Expectation in Perps Vault
When players have a 50% chance of winning on a long/short position and the house takes a trading fee and funding fee, over time, the house will prevail.
Fees Structure
Liquidity providers earn rewards from the trading activity on the platform through a well-defined fee structure. The fees are primarily sourced from:
Trading Fee: A small fee is charged 0.1% on every trade executed on the platform, contributing to the overall revenue for the liquidity pool.
One Time Funding Fees In addition to trading fees, funding fees are collected periodically to balance the demand and supply of leverage on the platform.
These fees are distributed among the liquidity providers, rewarding them for their role in maintaining the liquidity and stability of the FWX Perpetual Trading platform. This fee structure incentivizes LPs to continue providing liquidity, ensuring that the platform remains operational and efficient. Read more Trading Conditions & Fee
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