Protective mechanisms

There a few mechanisms in place to mitigate risks for the users and Boros' system.

OI Cap

• There is a hard cap on the OI of any market

• To get the value from market API:

  • OI Cap = hardOICap/1e18

Closing Only Mode

• When the market dynamics becomes too extreme (for example, abnormally high price volatility or low liquidity), the Closing Only Mode will be automatically turned on

• When Closing Only Mode is on, users will only be able to close existing positions (and not open new positions)

Max Rate Deviation

• The system disallows any market trade that happens at a rate too far away from the current mark rate.

• If a trade exceeds this limit, an error “Large Rate Deviation” will be displayed on the UI

• The exact requirement is as follows:

$$|markRate - rateTraded| \leq maxRateDeviationFactor \times max(markRate, RateFloor)$$

• maxRateDeviationFactor = maxRateDeviationFactorBase1e4 / 1e4

  • where maxRateDeviationFactorBase1e4 is from the market API

Max Bounds on Limit Order rates

• When placing a limit order, a user can’t long at a rate too high above the mark rate, or short at a rate too low below the mark rate.

• The exact mechanics is this:

  • A long order rate must not exceed f^u

  • A short order rate must not be lower than f^l

$$f^u(r_m) = \begin{cases} r_m\times upperLimitSlope & r_m \geq I_{threshold} \\ r_m + upperLimitConstant & 0 \leq r_m < I_{threshold} \\ -f^l(-r_m) & r_m < 0 \end{cases}\\ f^l(r_m) = \begin{cases} r_m\times lowerLimitSlope & r_m \geq I_{threshold} \\ r_m + lowerLimitConstant & 0 \leq r_m < I_{threshold} \\ -f^u(-r_m) & r_m < 0 \end{cases}$$

• To get the variables from the values returned from market API:

  • upperLimitSlope = loUpperSlopeBase1e4 / 1e4

  • upperLimitConstant = loUpperConstBase1e4 / 1e4

  • lowerLimitSlope = loLowerSlopeBase1e4 / 1e4

  • lowerLimitConstant = loLowerConstBase1e4 / 1e4