Liquidity Efficiency

In conventional perpetual DEXes with server-based ADL mechanisms, the liquidity-to-position rate often has to be highly abundant to protect the exchange from unpredictable market volatility. With smooth deleveraging curves built into the payoff function, Derion provides a much safer and more efficient liquidity provision environment.

Only a low rate of liquidity-to-position size is required to keep the market in its Optimal Leverage range. As soon as the market is about to slip out of the Optimal Leverage range, more liquidity can be provided without any disruption of the service or trader experience. The worst-case scenario is the market just slightly slips out of the Optimal Leverage range; additional liquidity is incentivized to be added while the effect on traders is barely noticeable.

With the smooth deleverage curve, LPs can be safely automated to share, optimize, and control risk with the LP Management contract.