How Do Private Liquidity Pools Work？

Random Order Matching Algorithm

Fufuture has introduced the first on-chain random order matching algorithm. Newly opened orders are generated through two random factors: the hash of the block and the block time. These are then modulated by the current length of the private liquidity pool, and the order is prioritized to the respective private liquidity pool. If the available balance of the private liquidity pool is insufficient, it will sequentially poll until an available private liquidity pool is found.

Order Acceptance Process

If the total balance of the private liquidity pool is insufficient to cover the trader's position profit, the position will automatically be liquidated by a third party. It won't trigger the liquidation of the trader's position simultaneously but will close the position to the public pool. If a deficit occurs during the liquidation process, losses from the penetrated positions are first compensated by the available balance of the private liquidity pool. Subsequently, the risk reserve compensates for any shortfall in the available balance. The liquidity of the public pool is assessed, and if sufficient, the liquidation-related costs of the order are transferred to the public pool. If there's no deficit during liquidation, only the order-related fees are liquidated. When the liquidity of the public pool is also insufficient, the order will be executed as agreed.

Private Liquidity Pool Liquidity Mining and Order Mining

Each wallet address corresponds to a private liquidity pool, to which liquidity can be provided at any time. Upon utilizing this liquidity, rewards in order acceptance liquidity are received. The platform token reward for each accepted order = Order transaction fee * 30% / 0.05. From the balance of the private liquidity pool, besides the portion used for margin, the rest is the available balance, which can be withdrawn at any time.

Private Liquidity Pool Order Status Feature

Fufuture provides an on-chain feature to modify the order status, assisting market makers in efficiently managing capital risks. This feature is enabled by default and can be modified through on-chain signed transactions. The margin rate for the private liquidity pool's accepted orders is 38%. When the margin falls below the trader's profit, forced liquidation is triggered. Market makers can add margin to the orders at any time, and this margin is exclusively drawn from the available balance of the private liquidity pool.