Swapping and Trading

Swaps

Degen pools support both swaps and leverage trading. For swaps, click on the "Swap" tab on the Trade page, this will open the interface to swap tokens.

For leverage trading, please see the below sections for more information.

Trading

Opening a Position

Click “Long” or “Short” on the Trade page depending on which side you want to open a leveraged position.

The trading logic remains the same as that of crypto pools and stable pools.

Long position:

• Earns a profit if the token's price goes up

• Makes a loss if the token's price goes down

Short position:

• Earns a profit if the token's price goes down

• Makes a loss if the token's price goes up

After selecting your side, key in the amount you want to pay and the leverage you want to use.

Selecting a Market

You can select a market by changing the token that you'd like to Long or Short.

Selecting a Pool

Multiple pools may be available for your selected market, for example, there may be an wS-scUSD and stS-stS pool. You can select which pool you'd like to trade in depending on which collateral you prefer to be backing your positions.

Selecting a Collateral

Multiple types of collateral may be available for your selected market, for example, in the wS-scUSD market, you can choose whether your position's collateral is stored as wS or scUSD.

Examples of how this could be used:

• Long wS with wS as collateral: You would have be long wS from your long position as well as from your wS collateral. It is possible to e.g. open a 20 wS long position for a small amount of wS while using 100 wS as collateral for a total of 120 wS exposure.

• Long wS with scUSD as collateral: You would be long wS only from your long position. This could be useful if switching frequently between longing and shorting.

• Short wS with wS as collateral: This could be useful for delta neutral strategies to earn funding fees. For example, if funding is such that longs pay shorts, then a 100 wS short position could be opened with 100 wS as collateral.

• Short wS with scUSD as collateral: This could be useful if switching frequently between longing and shorting.

Note that if opening a long position with a non-stablecoin as collateral, your liquidation price may change as the price of your collateral changes.

Max Leverage

The max allowed leverage of a pool will decrease as the total open interest of the pool increases, this is to guard the pool against gaming of price impact using high leverage positions. This mainly affects markets with less liquidity but can affect high liquidity markets if the open interest is very large. The interface will show a warning if the max allowed leverage will be exceeded. Note that this only affects opening / increasing of positions, it will not affect positions that have already been opened. For closing / decreasing of positions, if the max allowed leverage would be exceeded when decreasing a position then the order can still be executed, but the collateral within the position would not be reduced.

Managing and Closing position still works the same as Isolated Margin. Read more.

Limit Orders

Limit orders can be created by selecting the "Limit" option after choosing to open a long or short position, or by selecting "Increase Size (Limit)" from the "..." menu in the position row if you already have an open position.

Once the limit price is reached, it will attempt to execute the limit order at the closest oracle price. Some traders use limit orders on CLOBs to be executed immediately to enter into a position and control the price impact and slippage in this way. On NAV, you can simply use a market order instead, as there is no price impact for increase orders, and you can set an acceptable slippage under the execution details.

After creating a limit order, it will appear under the "Orders" tab. You can edit the order and adjust the limit price if needed.

Note that limit orders are not guaranteed to execute, this can occur in a few situations including but not exclusive to:

• The mark price which is an aggregate of exchange prices did not reach the specified price

• The mark price was reached but there may not be sufficient liquidity to execute the order

• The mark price was reached but the max allowed leverage would be exceeded

Stop Market Orders

Stop market orders can be created by selecting the "Stop Market" option after choosing to open a long or short position, or by selecting "Increase Size (Stop Market)" from the "..." menu in the position row if you already have an open position.

After creating a stop market order, it will appear under the "Orders" tab. You can edit the order and adjust the trigger price if needed.

Note that stop market orders are not guaranteed to execute, this can occur in a few situations including but not exclusive to:

• The mark price which is an aggregate of exchange prices did not reach the specified price

• The mark price was reached but there may not be sufficient liquidity to execute the order

• The mark price was reached but the max allowed leverage would be exceeded

TWAP Orders

TWAP (Time-Weighted Average Price) orders will increase or decrease positions, as well as perform swaps, in evenly distributed parts over a specified time. By breaking down the order into smaller chunks and executing them over a predefined time period, TWAP aims to reduce the price impact.

These can be created by selecting the "TWAP" option after choosing to open or decrease a long or short position, or by selecting "Increase Size (TWAP)" from the "..." menu in the position row if you already have an open position. TWAP orders are also available for swaps.

After creating a TWAP order, it will appear under the "Orders" tab. TWAP orders can't be edited, but they can be cancelled and recreated. Blockchain network fees for TWAP orders are paid once when created, so if they increase, the extra costs will be paid by Navigator.

Note that TWAP orders parts are not guaranteed to execute, this can occur in a few situations including but not exclusive to:

• There may not be sufficient liquidity to execute the order

• The max allowed leverage would be exceeded

Take Profit and Stop Loss Orders

Take profit and stop loss (TP / SL) orders can be created by clicking the "Close" button for a position, selecting "Set TP/SL" from the "..." menu in the position row, or using the "TP/SL" tab in the trade box.

After creating a TP / SL order, it will appear in your position's row and under the "Orders" tab. You can edit the order and adjust the trigger price if needed.

Note that TP / SL orders are not guaranteed to execute, this can occur in a few situations including but not exclusive to:

• The mark price which is an aggregate of exchange prices did not reach the specified price

Auto-Cancel TP / SL

The Auto-Cancel feature automatically cancels Take Profit and Stop Loss (TP / SL) orders when the associated position is fully closed, whether by market close, liquidation, or a triggered TP/SL order. It does not cancel Limit or Stop Market orders.

Auto-Cancel is enabled by default for new TP/SL orders but can be turned off in Settings.

Currently, there is a limit of 6 auto-cancel orders per position. Any orders beyond this limit won't be auto-cancelled. Users will be notified if they exceed the limit, which may change in the future.

Order Execution

If a Limit / Stop Market / Stop Loss / Take Profit order's trigger price is reached, the order will attempt to be executed. If there is insufficient liquidity then the order will be in a frozen state. Regular orders will be executed at the price closest to the trigger price, for frozen orders, they will be executed at the latest price instead.

Liquidations

If an wS long position is opened and the position size is larger than the collateral value, then there would be a price at which the position's loss amount is very close to the collateral value.

This is referred to as the liquidation price and is calculated as the price at which the (collateral - losses - fees) is less than a certain percentage, which ranges from 0.4% to 1%, depending on the market and pool settings, of your position's size. If the token's price crosses this point, then the position will be automatically closed.

The price used to calculate whether a position is liquidatable is based on the oracle price, and it does not factor in any negative or positive price impact. When the position is liquidated, the actual positive and negative price impact is applied to close the position.

Due to borrowing and funding fees, your liquidation price is not static. Especially if you use leverage greater than 10x and have the position open for more than a few days, it's crucial to actively monitor your liquidation price.

Collateral can be deposited using the "Edit" button in the position row; this will help to improve the liquidation price and reduce the risk of liquidation.

When a position is liquidated, any collateral remaining after deducting losses, liquidation fees and other pending fees would be returned to your wallet.

Liquidation fees:

• 0.2% for non-synthetic markets

• 0.3% for synthetic markets

• 0.45% for newly listed / high volatility markets

Market Types and ADL

Two types of markets are possible in Navigator Degen Pools.

Fully backed markets

An example of a fully back market would be an wS perp market backed by wS-scUSD where the open interest is limited to be less than the total amount of wS and scUSD tokens in the pool.

For example, if there is 1000 wS and 1 million scUSD in the pool and the max long open interest is limited to 900 wS and the max short open interest is limited to be 900k scUSD, then all profits can always be fully backed regardless of the price of wS.

Synthetic markets

An example of a synthetic market would be a BTC perp market backed by stS-stS. While the max long open interest could be limited to a fraction of the amount of wS tokens, it may be possible for the profits of long positions to exceed the worth of the tokens in the pool.

For example, if there is 1000 stS and 10.000 stS in the pool and the max long BTC open interest is limited to 300 stS, but the price of BTC increases 10x while the price of stS increases only by 2x, in this case the pending profits would exceed the worth of the stS in the pool.

To avoid this scenario, ADL (Auto-Deleveraging) may take place. When the pending profits exceed the market's configured threshold, profitable positions may be partially or fully closed. This helps to ensure that markets are always solvent and all profits at the time of closing can be fully paid.

Fees and Rebates

Open / Close Fees

The trading fee to open a position is 0.04% or 0.06% of the position size, similarly there is a 0.04% or 0.06% fee when closing the position. This applies for increasing the position size of an existing position and partially decreasing a position size as well.

If the trade increases the balance of longs and shorts then the fee would be 0.04%, otherwise the fee would be 0.06%.

Swap Fees

The fees for a normal swap are 0.05% or 0.07% of the swap amount.

If the trade increases the balance of tokens in the pool then the fee would be 0.05%, otherwise the fee would be 0.07%.

The fees for correlated token swaps (such as S <=> stS) are 0.02% of the swap amount.

Slippage

Slippage is the difference between the expected execution price and the actual execution price, caused by price volatility during the brief time while the order is being executed. It's different from price impact. The default allowed slippage is set to 1% and can be adjusted in settings or in the trade box when trading. For example:

• Expected execution price: $4,000 for a S/USD long.

• Actual execution price: $4,080 (2% up) due to volatility.

• The order will not be executed unless the set allowed slippage was 2% or higher to permit it.

Price Impact and Price Impact Rebates

On Navigtor, the entry price for opening positions is always the mark price, with no price impact. Price impact only applies to decrease orders. It is based on the net balance or imbalance caused by both opening and closing positions—hence the name "net price impact."

Net price impact can be positive or negative, up to 50 bps (0.5%). This means you will never pay more than 50 bps in price impact, no matter the order size. So, in Navigtor Degen Pools Trading—unlike in orderbook models—the price impact is capped. You don't have to worry about orderbook depth. Also, unlike in orderbooks, a positive price impact means you can get paid. You can view net price impact in the net value tooltip on the positions list or close modal. For advanced technical details, enable "Breakdown Net Price Impact" in the display settings.

For large orders, consider using TWAP to further reduce price impact by executing them in smaller parts over time. Liquidation prices are not affected by net price impact, as they rely on oracle prices. However, net price impact is applied to leftover collateral during liquidation. For swaps, positive price impact increases the tokens you receive, while negative price impact decreases them.

Long and short open interest in markets are typically balanced, leading to minimal net price impact. During high volatility, imbalances can cause higher net price impacts. Price impact rebates help mitigate this. As mentioned, each market has a maximum negative net price impact threshold of 50 bps (0.5%). If a decrease order has a negative net price impact exceeding this threshold, the excess becomes claimable as a rebate after five days.

You can claim rebates in the claims section on the trade page after the delay, which protects against manipulation. Rebates are reviewed and granted only to non-manipulating accounts.

Funding Fees

There may be positive or negative funding fees while a position is open.

The funding fee rate can be viewed on the interface when making a trade. Note that the rate will change over time based on the balance of longs and shorts.

If you receive positive funding fees for your position, these fees can be claimed by using the "Claim" button in the "Claimable Funding" box of the Trade page.

Adaptive Funding

Funding rates gradually adjust over time based on the long and short ratio.

For example, if the total long open interest is larger than the short open interest then the funding rate that longs pay shorts will gradually increase until the difference between the long and short open interest is below a certain threshold or an upper limit is reached, at which time the funding rate will remain constant.

If in this scenario more shorts are opened or longs are closed such that there are now more shorts than longs then the funding rate that longs pay shorts will gradually decrease until the difference between the long and short open interest is below a certain threshold.

If there remains more shorts than longs then the funding rate will gradually adjust in the other direction such that shorts will pay longs a funding rate that gradually increases until the difference between the long and short open interest is below a certain threshold or an upper limit is reached.

Borrowing Fees

To avoid a scenario where liquidity is fully reserved by a user opening equal long and short positions for a small cost, there is a borrowing fee for open positions. If there are more longs than shorts then longs would pay the borrowing fee, if there are more shorts than longs then shorts would pay the borrowing fee. This borrowing fee also helps to incentivise more liquidity to be added in the event that all liquidity is reserved for positions.

The borrowing fee rate can be viewed on the interface when making a trade. Note that the rate will change over time based on the pool utilization percentage.

Network Fee

There are two transactions involved in opening / closing a position:

• User sends the first transaction to request open / close / deposit collateral / withdraw collateral

• Keepers observe the blockchain for these requests then execute them

The cost of the second transaction is displayed in the interface as the "Max Network Fee". This network cost is paid to the blockchain network when the order is executed. This cost is overestimated to handle potential increases in gas price. When the order is executed, the excess execution fee is sent back to your account. The amount of overestimation can be configured using the "Settings" menu in the top right corner of the page.

Trading Risks

Caution should be exercised when interacting with any smart contract or blockchain application. While risks are attempted to be mitigated through testing, audits and bug bounties, there is always a risk of vulnerabilities in smart contract code.

A non-exhaustive list of risks:

• Smart contract risks

• Liquidations

• ADLs

Additionally, collateral and profits may be backed by bridged or pegged tokens which may not be guaranteed to maintain peg.

Arbitraging

If pools are imbalanced for swaps or perps, arbitraging can be done to gain a profit while helping to balance the pools.

Swaps

For swaps, positive price impact can be arbitraged.

For example, in the wS-scUSD pool, if the USD value of wS in the pool is more than the USD value of scUSD in the pool, then there would be a positive price impact to swap scUSD for wS. This positive price impact would result in additional wS being received for a scUSD to wS swap.

Perps

For perps, positive price impact and funding fees can be arbitraged.

For example, if there are more S long positions than short positions then there would be a positive price impact to open S short positions, this would result in a better entry price than the current market price. The position would also earn funding fees while it remains open.

If in the same scenario, the S long positions close such that there are more shorts than longs, then there would be a positive price impact to close the long position, this would result in a better exit price than the current market price.

For markets where the index token is the same as the collateral token, e.g. using wS collateral in the S perp market, delta neutral positions can be opened by using the collateral token to open a short position. Conversely, when arbitraging with long positions, a 1x long position can be opened using a stablecoin as collateral, this would lead to 1x exposure to the index token.

Note that funding will tend towards zero as the long / shorts become balanced, this should be considered when deciding on the position size to open for arbitrage.