FAQs
Frequently asked questions by traders using Hxro-powered applications
What is a TRG and how do I set one up to trade on Hxro Network?
TRG’s are the accounts a trader creates to place trades in Hxro powered orderbooks. Creating TRGs is a permissionless action that anyone can enact directly to Dexterity for a desired MPG. The process of creating TRGs is abstracted for users by all applications connected to the Hxro Network through the programs or SDKs.
To set up a new TRG account, head to any Dexterity-powered derivatives trading application and create your account there.
Reminder: A wallet can have many TRGs under it, don’t create more accounts that you wish. TRGs can also be burned to get back part of the SOL used for the account creation rent.
How is TRG health calculated?
Your TRG health is determined by the margin requirement to collateral ratio of your portfolio, using the following points of reference:
IMR => Initial Margin Requirement
MMR => Maintanance Margin Requirement
SPANDEX uses the levels above to determine your account health state, which dictates what actions your account is allowed to do. Account health categorizations are as follows:
Healthy
When your accounts value is higher than the current IMR level
You can take any risk-taking actions like entering positions and placing orders as long as you stay above the IMR level
Unhealthy (Cancel-Only)
When your account falls below the current IMR level
Your account can only take risk-reducing actions in this state such as winding down positions and canceling open orders to rise above the IMR level into Healthy account state
Liquidatable
When your account falls below the MMR level
Account is eligible for a liquidator take over your account’s positions, and liquidate to reduce risk
What is portfolio-based margining and how can it benefit traders on Hxro Network?
As discussed in the derivatives protocol overview Hxro Network’s SPANDEX is the only on-chain, real-time, portfolio-based risk and margin engine.
One of the biggest considerations for any derivatives trader is avoiding liquidation by maintaining the collateral requirements associated with open positions. Historically in crypto derivatives markets, the required margin put up by traders is calculated on an isolated, position-by-position basis.
When a trader has several positions open simultaneously, the total required margin can quickly stack up, making the use of their capital extremely inefficient, lowering their ROI, and limiting their overall trading opportunity.
The goal of portfolio-based margin is for margin levels to be set in a way that more precisely reflects the net risk of the trader’s account. SPANDEX evaluates risk based on the asset composition of the trader’s portfolio, accounting for assets that may have offsetting risk effects (such as highly correlated positions) that could result in significant margin requirement relief.
SPANDEX calculates risk on every market update in real-time, capturing the greatest benefits of transparency and on-chain risk management. For example: A change in wallet balance, a change in mark price, or time to expiration can all play a role in how a portfolio’s risk is assessed. Changes in input values would therefore update the user's risk health and the health of the entire market product group.
A hypothetical example of how portfolio margin works:
Suppose you had two positions in your portfolio:
+100 SOL-PERP
-100 SOL-1WFUTURE (a 1-week expiring future)
Because these are both derivatives of SOL, they closely follow the price of the $SOL spot market.
In an isolated risk model, the account would be margined as if each position is independent.
In a portfolio-based approach, risk is measured based on the asset composition of the portfolio
Because of the relationship between the two positions, and because they are offsetting, portfolio-based margin could provide as much as 90% margin relief for the user, resulting in a much more efficient use of capital.
Based on the above example, the risk capital required on an isolated basis is roughly 6.3x greater than if the position was margined using a portfolio-based methodology like SPANDEX.
When combined with Hxro’s Dexterity protocol, which enables both outright and atomic spread (orderbook markets on two or more assets) derivatives on @solana via Hxro can now unlock a new dimension of trading opportunity and liquidity that has yet to be seen.
As with any type of margin trading, portfolio margin does come with risks such as:
A portfolio margin account generally permits greater leverage in an account and greater leverage could create greater losses in the event of an adverse market movement.
As with any risk model, it may be difficult to account for all portfolio risks.
Because portfolio margining is determined using sophisticated mathematical calculations and values that are derived from market data oracles, it may be more difficult for traders to predict the size of future margin deficiencies in their accounts.
Traders should always evaluate the risks of portfolio margin when making a trading decision.
What fees are associated with trading on Hxro Network? Is there any way to reduce the network fees I pay?
Network-level trading fees
As a liquidity and infrastructure layer supporting on-chain derivatives trading and betting applications, Hxro collects a network fee for all transactions on Hxro-powered dapps. Before discounts, the following transaction fees are collected by Hxro Network:
Derivatives Trading
The baseline fee for derivatives products, via Dexterity protocol, is 0% for maker orders and 5bps for taker orders.
Betting
The baseline fee for parimutuel pools, via Hxro’s Parimutuel protocol, is 5%. This fee is only collected from the winning side of each pool.
Network-level fee discounts are available via thet Hxro Network Staking Incentives program.
Dapp-Level Fees
Each Hxro-powered dapp may have a different fee structure additive to Hxro’s base protocol fees. Read dapp-specific documentation for details on additional fees you may be subject to.
What type of derivatives contracts are available on Hxro Network?
Perpetual Futures
Perpetual futures contracts are financial derivatives that resemble traditional futures but with no expiration date, allowing positions to be held indefinitely. They offer leverage, enabling traders to amplify their exposure to price movements. A unique feature is the funding rate mechanism, which adjusts periodically to keep the contract's price aligned with the underlying asset's market price. These contracts are widely used for speculative trading in various markets
Expiring Futures
Expiring futures are financial contracts that represent an agreement to buy or sell an asset, like a commodity, currency, or financial instrument, at a predetermined future date and price. These contracts have a specific expiration date, after which they become invalid. As the expiration date approaches, traders must decide whether to roll over the contract to a new future period, close their position by settling in cash, or let the contract expire and settle. The price of the futures contract can fluctuate based on market conditions, and as the expiration date nears, this can lead to increased volatility and trading activity.
Inter and Intra Spread Markets
Spread markets allow traders to atomically trade the differential between two or more markets, simultaneously buying one market and selling another. Dexterity makes it possible for spreads (sometimes called combos) to trade in an orderbook as its own standalone market.
Zero-Day Futures
Zero-Day Futures (ZDFs), are expiring futures instruments with a 25-hour expiry cycle, better suited for short-term speculation on numerous very volatile assets.
ZDFs are similar to 0DTEs in TradFi but represent a future contract with a day to expiry.
These are at-the-curve futures contracts, unlike perpetuals.
24 hours of 25 are dedicated towards trading, whereas the additional hour is dedicated towards settlement.
Positions are automatically settled to cash if they are not rolled over to the next contract.
Note: There is NO funding rate component.
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