🐋
Moby
  • Let’s Get Started
    • 🐋 About Moby
    • ⚡ Our Vision
    • 🤓 Your Guidebook
      • Get Setup
        • Connect Wallet
        • Trade Options
        • 0DTE Options
        • Provide Liquidity
      • Fees & Instruments
        • Fee Generation
        • Fee Distribution
        • Instruments
      • Testnet
  • How it’s Built
    • 🚀 Synchronized Liquidity Engine (SLE)
    • 🧮 Options Pricing Model
      • Mark Price
        • Futures Index
        • Implied Volatility
      • Risk Premium
        • Deriving Greeks
        • Risk Premium Calculation
        • Risk Managing Mechanism
    • 🤖 Architecture
      • Liquidity Provision Mechanism
      • Options Listing Standard
      • How to Open / Close / Settle Position
      • Synchronized Liquidity Engine (SLE)
      • Options Position Tokens
      • Tools to Maximize Capital Efficiency
    • ⚙️ Key Features
      • High Leverage & Limited Risk with No Liquidation
      • Narrow Spread with Dynamic Risk Premium
      • Guaranteed Settlement
      • Capital Efficiency Improvements with Combo Options
      • Even Higher Capital Efficiency with Clearing House
      • Abundant Liquidity for All Options
      • Composable Options for Structured Products
      • High Profitability for LPs
      • Real-Time Automatically Hedged OLP
      • Upcoming Features
    • ⛓ DeFi Options Vault
      • 🐻 Berachain DeFi Options Vault
        • 🔒 Architecture
        • 📈 Options Strategy
  • How it’s Driven
    • 🛡️ Building the Safest DeFi Protocol
      • Safety Features
      • Smart Contract Audit & Real-Time Security Monitoring
    • 🏛 Backed by Decentralized Governance
      • Governance
    • 🌐 Led by the Best Partners & Community
      • Arbitrum X Moby
      • Engagement Programs
  • Need More Info?
    • 📚 Resource Library
      • Developer Resources & Educational Contents
      • Terms & Conditions
      • Glossary
      • FAQ
  • Developers
    • Moby Traders API
      • REST API
        • General
        • Account
        • Market
    • Trade Scripts
      • Prerequisites
      • Open Positions
      • Close Positions
    • Interfaces & ABI
      • PositionManager.sol
      • SettleManager.sol
      • RewardRouterV2.sol
      • OptionsMarket.sol
    • Appendix 1: Parameters for Open/Close Options
    • Appendix 2: the Diff between optionId and optionTokenId
    • Appendix 3: Sample Moby Contract Module for Developers
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On this page
  • Solving the Capital Limitation Problem
  • No Capital Limitation on Moby’s Liquidity Provision
  • Solving Liquidity Problem, Even for ITM (In-the-Money) Options
  • No Liquidity Constraint on Moby
  1. How it’s Built
  2. ⚙️ Key Features

Abundant Liquidity for All Options

Solving the Capital Limitation Problem

  • In orderbook-based exchanges, placing a quote to buy or sell an option requires traders and LPs to commit capital, constraining the volume and frequency of opening positions

  • Moby's Options Liquidity Pools (OLPs) are distinguished by their ability to supply liquidity for all options positions on a 24/7 basis without capital limitation

No Capital Limitation on Moby’s Liquidity Provision

  • Moby boosts capital efficiency by mandating capital only at the time of trade execution, eliminating the need for capital with each quote

  • Traders on Orderbook-based exchanges, like the liquidity provider, need capital whenever they place a quote in the orderbook

  • This limits the liquidity due to the capital efficiency of the liquidity provider

  • Conversely, OLP does not tie up capital every time you quote; it only happens when you execute a trade at the options price (premium)

  • Because of this, OLPs can utilize all of their capital for every option specification

  • Example: On an orderbook-based exchange, a Liquidity Provider with $100 can order $1 for each order book with 100 options. In Moby, an OLP with $100 would quote all 100 options at $100 each

Solving Liquidity Problem, Even for ITM (In-the-Money) Options

  • Closing In ITM Options on orderbook-based exchanges poses challenges due to their high intrinsic value-driven price, leading to low profitability and consequently minimal incentive for LPs to offer liquidity

  • The lack of incentive for LPs to back ITM Options leads to a liquidity shortage and difficulties for traders to close or sell their ITM Options positions

  • This scarcity makes it hard for traders to realize profit on successful predictions, as limited buyers or sellers are available to facilitate the trade

No Liquidity Constraint on Moby

  • Moby's OLPs do not require capital upfront to supply liquidity, which significantly facilitates the provision of required liquidity to close ITM Options

  • Moby’s round-the-clock liquidity provision ensures a seamless trading experience, enabling efficient strategy execution and position management for traders, especially in situations where traditional platforms might face liquidity constraints

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Last updated 1 year ago