Protocol Rules

# Trader

A trader can decide to do 2 kind of trades, an OTC trade or a market trade.

# OTC

Under the hood an OTC (Over The Counter) trade is the minting of a synthetic asset.

To enter an OTC trade requires depositing X amount of collateral in the pool and receive the synthetic asset in return by securing the equivalent amount from the liquidity providers.

To exit an OTC trade requires burning the synthetic asset and receive the equivalent amount of collateral in return.

In both enter and exit, we have a 2 step process to avoid oracle latency attacks. Where a trader get matched at the previous price while knowing the new price.

In case of an enter - the first step is to lock the native token of the network. Once a new price is available, the trader - or a permissioned third party - can claim the synthetic asset at the new price.

In case of an exit - the first step is to lock the synthetic asset. Once a new price is available, the trader - or a permissioned third party - can claim the native token of the network at the new price.

In both case, the trader needs to claim at the next price, if not, the trade will be canceled.

We call it an OTC trade because it feels and behave like a traditional OTC trade, it is done at regular interval and is not subject to slippage.

# Market

A market trade is a regular swap on any DEX. It is subject to slippage and is not a 2 step process.

Asset minted on S&F are fungible rebase token, it can be deposited in an Uniswap pool and trade against any other token.

Most trade on S&F are expected to be market trade, OTC trade being used as a way to mint/burn synthetic assets at regular interval.

# Fees

Please refer to the fee section for more information.