- This is their decentralized derivatives exchange with under-collateralized Options & Futures trading.
- FLEX is our options minting & auctioning infralayer for DeFi - enabling any protocol to leverage options. This is already used by Katana, Ribbon Finance & Exotic Markets - with more on the way
Zeta's Margining System
Zeta solves these problems by leveraging Solana's 400ms block time. This allows us to update prices and monitor positions multiple times per second, enabling the implementation of a margining system which allows for an under-collateralized trading experience that rivals centralized exchanges.
The key elements that factor into our margin system are:
- Mark Pricing: In a world of under-collateralized trading one of the most important inputs is knowing how much a user's positions are worth. Without this knowledge it's impossible to determine their PnL and their risk. Zeta has its own internal pricing engine which calculates the Mark Price of all tradable assets and uses this to inform its margin and collateralisation system.
- Collateral Framework: This is essential for managing the capital in the system. Under-collateralized trading is all about using capital efficiently. However, as always when trading more than you have there are more risks. The collateral framework is what ensures that this balance is maintained so that the exchange at large can continue functioning.
- Liquidation Mechanism: The last piece of the puzzle is a liquidation mechanism which is utilized to keep the platform from losing money. This liquidation mechanism allows liquidators to step in when a user's trading account is too risky to continue trading. When this occurs the user is liquidated to ensure that the losses do not extend beyond isolated users
- The first time a user deposits, a zeta margin account is created for the user.
- This is a one time cost that costs ~0.044 SOL. The rent exemption is high since we support so many markets. Market accounts are created for each maturity / strike at a cost of ~0.02 SOL per account created and are recycled; the same account can be used for future strikes / expiries.
- Options / Futures Fees:
- Taker Fees: min(0.3% of underlying, 5% of trade price).
- Maker fees: 0
How Are Trades Settled?
- Zetas programs use an oracle feed to fetch the underlying asset price. This is used in our system to then track market prices and also settlement prices which are used to mark the outcome of a trade. When a trade is closed or settled the profit and loss is realized to the users trading account.