💸Pricing Mechanism
The pricing of perpetual contracts is intricately tied to the structure of the liquidity pool, governed by the following stipulations:
LP and User Positions: Whenever users initiate, close, or face liquidation, LPs automatically assume opposing positions of identical size and at the same price as the user.
Liquidity Pool Balance Rate (BR): The BR is computed through the formula: BR = Short Positions Value Held by LPs / Total Liquidity of LPs. When LPs have no positions, BR is zero, indicating a fully balanced liquidity pool. In the presence of long positions held by LPs, BR becomes negative.
Price feeds: We use Chainlink for price feeds. Chainlink is a decentralized oracle platform widely used in blockchain and smart contracts. Chainlink's price feeds provide a reliable, secure, and real-time way to bring external data into smart contracts. Chainlink ensures high trust in prices through a multi-node consensus mechanism.
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