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Spot Market Concepts

Definitions​

In a Spot Market with ticker AAA/BBB, AAA is the base asset, BBB is the quote asset.

For example, in the ETH/USDT market

  • ETH is base asset
  • USDT is the quote asset

The spot market's price refers to how much USDT (the quote asset) is required for one unit of ETH (the base asset). For all spot markets, fees are always paid in the quote asset, e.g., USDT.

Debit vs Credit

  • Debit Amount refers to the amount of asset that is withdrawn from an account.
  • Credit Amount refers to the amount of asset that is deposited to an account.

Refunds

In our system, a refund refers to the action of incrementing the available balance of an account. This liberation of funds occurs as the result of an encumbrance being lifted from the account (e.g. cancelling a limit order, reducing an order's payable fee to a maker fee, using less margin to fund a market order, etc.).

Limit Buy Order​

A limit buy order seeks to buy a specified Quantity ETH (base asset) in exchange for Quantity * Price amount of USDT (quote asset) plus fees which depend on whether the limit order becomes executed as a maker order or a taker order.

Limit Sell Order​

A limit sell order seeks to sell a specified Quantity ETH (base asset) in exchange for Quantity * Price amount of USDT (quote asset) minus fees which depend on whether the limit order becomes executed as a maker order or a taker order.

Market Buy Order​

A market buy order seeks to buy a specified Quantity ETH (base asset) at a specified worst price which is at or near the current ask using the respective account quote asset balance (USDT) as collateral** (inclusive of fees).

As a result, each market buy order implicitly has a maximum acceptable price associated with it, as filling the market order beyond that price would simply fail due to a lack of funds.

Market Sell Order​

A market sell order seeks to sell a specified Quantity ETH (base asset) at a specified worst price which is at or near the current bid in exchange for any amount of the quote asset (USDT) available in the market.

As a result, each market sell order implicitly has a zero price associated with it.

Order Types​

  • BUY (1): A standard buy order to purchase an asset at either the current market price or a set limit price.
  • SELL (2): A standard sell order to sell an asset at either the current market price or a set limit price.
  • STOP_BUY (3): This order type is not supported for spot markets.
  • STOP_SELL (4): This order type is not supported for spot markets.
  • TAKE_BUY (5): This order type is not supported for spot markets.
  • TAKE_SELL (6): This order type is not supported for spot markets.
  • BUY_PO (7): Post-Only Buy. This order type ensures that the order will only be added to the order book and not match with a pre-existing order. It guarantees that you will be the market "maker" and not the "taker".
  • SELL_PO (8): Post-Only Sell. Similar to BUY_PO, this ensures that your sell order will only add liquidity to the order book and not match with a pre-existing order.
  • BUY_ATOMIC (9): An atomic buy order is a market order that gets executed instantly, bypassing the Frequent Batch Auctions (FBA). It's intended for smart contracts that need to execute a trade instantly. A higher fee is paid defined in the global exchange parameters.
  • SELL_ATOMIC (10): An atomic sell order is similar to a BUY_ATOMIC, and it gets executed instantly at the current market price, bypassing the FBA.

Market Data Requirements​

Orderbook data aside, so long as our Chain supports the base capability to obtain Tick by Tick trading data, aggregations can be applied to obtain most of the necessary higher order data, including

  • OHLCV data
  • Account Trading History
  • Market Statistics

Spot Market Lifecycle​

Governance based Spot Market Creation​

A market is first created either by the instant launch functionality through MsgInstantSpotMarketLaunch which creates a market by paying an extra fee which doesn't require governance to approve it. Or it is created in the normal way through governance through MsgSpotMarketLaunchProposal.

Listing Fee based Spot Market Creation​

Allow anyone to create an active spot market of their choice without requiring governance approval by burning a pre-set SpotMarketInstantListingFee of INJ.

We should still check that the denom is valid though.

Spot Market Status Update​

A Spot Market can exist in four different states:

  1. Active
  2. Paused
  3. Suspended
  4. Demolished

Active State​

If a spot market is an active state, it can accept orders and trades.

Paused State​

If a spot market is a paused state, it will no longer accept orders and trades and will also not allow any users to take actions on that market (no order cancellations).

Suspended State​

If a spot market is a suspended state, it will no longer accept orders and trades, and will only allow traders to cancel their orders.

Demolished State​

When a market becomes demolished, all outstanding orders are cancelled.

Market Status State Transitions​

There are three state transitions that correspond to the following status changes

  • Activate Action - Paused or Suspended Status → Active Status
  • Pause Action - Active or Suspended Status → Paused Status
  • Suspend Action - Active or Paused Status → Suspended Status
  • Demolish Action - Paused or Suspended Status → Demolished Status

Spot Market Parameter Update​

The following parameters exist for Spot Markets

  • SpotMarketInstantListingFee
  • DefaultSpotMakerFeeRate
  • DefaultSpotTakerFeeRate