nsvoud (🌳)
1.3K posts
Introducing Discovery Bounds V2 Discovery Bounds are price bands which restrict how far the mark price may deviate from the last externally derived fair price. The mechanism gives traders, market makers, and the broader market a clear and reliable off-hours framework, and has substantially facilitated the maturation of 24/7 trading. Today, we are introducing Discovery Bounds V2 starting with our CL and BRENTOIL markets only. Discovery Bounds V2 address two fundamental limitations of V1: (1) The bound width was mechanically coupled to maximum leverage. Increasing available leverage narrowed the band, and widening the band required reducing leverage. Two distinct risk parameters forced into a single value. (2) The bounds were static. If a market reached its limit, price discovery stopped until traditional markets reopened, regardless of whether the move was legitimate. Discovery Bounds V2 addresses both. Bound width is now independent of maximum leverage, allowing each to be calibrated to the risk profile of the instrument. Bounds are no longer static - when a market sustains activity at its limit, the oracle gradually catches up and the bounds reset, allowing further price discovery without requiring traditional markets to reopen. The safety properties of bounded off-hours trading are fully preserved. The new change is in effect for CL and BRENTOIL markets only. Future updates will expand the application of the Discovery Bounds V2, with each market having its own preconfigured discovery bound threshold and maximum number of steps. For more information: #how-discovery-bounds-work" target="_blank" rel="nofollow noopener">docs.trade.xyz/perp-mechanics…
