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Background

In order to enhance the trading experience, there’s certain type of maker who will provide guaranteed liquidity in all conditions, and they’ll never take liquidity from others.

To incentivize this type of maker, there’s a “borrowing fee” mechanism which aims to compensate those makers, paid by the trader who takes the liquidity from the system.

Definitions

• Long and short states are separated and independent
• Taker can only be payer. Maker can be either payer or receiver

Utilization Ratio

$$ utilizationRatio := \begin{cases} Min(1, \cfrac{Abs(openNotional)}{margin}) &\text{if margin > 0} \\ 1 &\text{if margin <=0} \end{cases} $$

WhitelistedMaker

• Can receive borrowing fee based on its utilization ratio.
• Don’t need to pay borrowing fee.

Criteria

• when anyone ask to trade, it must fulfill its duty as an maker who can not censor order

1. can not increase position actively
   • [ ] can reduce position actively, so it can still be taker. the naming is not accurate
2. when an account accept or quite this role, it must have no position at that moment. only DAO can update this role

Non-WhitelistedMaker

Everyone who is not whitelisted maker should pay borrowing fee.

• The party acting as the maker in the off-chain order book.
• Other unofficially maintained private makers. (Not open to private makers for now)