Pricing Data and the Role of Oracles
A unique approach to pricing data drives the trading environment in many decentralized platforms. Pricing data is typically sourced through solvers—market participants who compete to offer the best and most accurate quotes. Rather than relying on a single data source (like centralized exchanges or CEXs), solvers have the flexibility to stream quotes from a wide range of sources, including both centralized and decentralized exchanges (DEXs). This flexibility helps ensure that prices reflect broader market conditions, allowing for the most competitive and accurate pricing for traders.
Pricing Data Source
Solver-Driven Quotes: At the heart of pricing data is the role of solvers, who actively stream pricing information to the platform. These solvers have the freedom to gather data from multiple sources, ensuring that the prices traders see are competitive and accurately represent market dynamics.
Data Accuracy: Because solvers are competing to provide the best quotes, the pricing data is not only reliable but also timely. This competitive nature minimizes slippage, ensuring that traders experience efficient and seamless trades with minimal price deviations.
The Role of Oracles
Dispute Resolution: Oracles play a crucial role in resolving pricing disputes, although they are not directly involved in the real-time data verification process. In rare cases where disagreements or uncertainties arise regarding pricing data, oracles step in as neutral authorities to ensure fair and transparent outcomes.
Liquidation and Account Health: Oracles are also key in evaluating account and position health, particularly in the liquidation process. When a trader’s margin falls below the required level, oracles assess the health of the position and trigger liquidation if necessary. By using oracle-sourced pricing, this mechanism ensures that the collateral deposited is adequate and protects against unexpected liquidations.
Note: Future versions of the platform may explore an oracle-less model to further maximize decentralization and reduce the risks of manipulation.
Benefits of the Approach
Reliability: The competitive environment among solvers ensures traders receive accurate and reliable pricing data. This fosters trust in the trading environment, ensuring that trades are based on competitive, market-driven prices.
Security: Oracles act as neutral third parties in both dispute resolution and liquidation processes. This structure helps prevent manipulation, ensuring a fair and transparent system where trades and liquidations are executed justly.
Efficiency: The solver-driven approach allows for a more efficient pricing mechanism. It ensures minimal latency and maximum accuracy, delivering a responsive and reliable trading experience.
The innovative approach to pricing data, driven by competitive solvers and supported by oracles for liquidation and dispute resolution, creates a secure and efficient trading environment. By enabling flexibility in pricing sources and using oracles for critical processes, this model provides a fair and resilient trading platform that aligns with true market conditions.
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