💹Flexible Market Making (FMM)
Last updated
Last updated
Holdstation DeFutures Flexible Market Making (FMM) model, inspired by Dodo Proactive Market Making Model. Unlike traditional models, Holdstation FMM applies funding fees in blocks across all assets—including perpetual futures for crypto, commodities, forex, and more.
The system is powered by a single smart contract that handles both pricing and funding fee logic, eliminating complexity and ensuring streamlined, capital-efficient trading.
With its general-purpose trading pool, Holdstation FMM creates a simpler, more efficient market-making structure, reducing overhead while maximizing liquidity and trader experience.
Holdstation DeFutures FMM algorithm works as follows:
FMM algorithm maintains equilibrium when the net position is 0 (non long-short users paid funding fee)
The mark price equals the index price fed by the dynamic price feed.
Trades push the mark price toward the specific trading direction.
The price change due to the trade is proportional to the trade size x.
The mark price is pushed proportionally to formula include P (call spread), with a determined by the available open interest
The trading volume pushes the mark price linearly.
The precise collateral size is calculated by the deduce the trading cost (leverage, collateral) - more details available in Protocol Fee
The price spread and the mark price are determined by the total net position.
The funding fee will calculate by individual blocks time, and determine the funding fees when the users close the orders.