| id | Title | Status | Author | Description | Discussions to | Created |
|---|---|---|---|---|---|---|
| TIP-101 | Fixed Limit Prices for Thales AMM | Vote Pending | Gorstak (@Gorstak), padzank (@padzank) | Replace out-of-range liquidity cutoff with fixed limit bid for lower limit and fixed limit ask for upper limit | https://discord.gg/rPpPcMXSeU | 2022-11-14 |
Implement a fixed 0.1 bid for below lower limit and fixed 0.9 ask for above upper limit ranges of implied probability from the AMM side.
ThalesAMM provides on-demand liquidity for positions that have implied probabilities within the 10% to 90% range and cuts off the liquidity for markets that go beyond those limits.
This TIP proposes to implement a mechanic where ThalesAMM will offer to be the taker of positions that are beyond the upper range limit for the fixed price of 0.9 sUSD and to be a maker of positions that are below the lower range limit for the fixed price of 0.1 sUSD. Users would always have the option to sell their positions for 0.9 sUSD per token if the implied probability is above 90%, and users would always have the option to buy positions for 0.1 sUSD per token if the implied probability is below 10%.
By introducing this mechanic of allowing people to exit their winning positions for a premium before maturity and also to enter risky positions for a premium should significantly increase the user experience compared to completely shutting off liquidity while also increasing the overall health of the AMM contract.
There are possible cases where users that hold positions with a very high probability of winning might want to liquidate their holdings without being forced to wait for maturity. As implied probability goes above 90% for a certain position, with this new mechanic, the ask of the AMM will remain fixed at 0.9 sUSD for those positions. This way any user can liquidate his almost-winning position at any time without being forced to wait for market maturity for closure.
By allowing traders to purchase positions with implied probability below 10% for the fixed price of 0.1 sUSD, it opens doors for additional volume drive through the platform without jeopardizing the health of the AMM. Instead of complete liquidity shut-off, user experience improves while the AMM has beneficial terms of on-demand liquidity by offering the positions with a premium compared to realistic implied probability.
This TIP entails the Thales Protocol DAO to implement a fixed 0.1 bid for below lower limit and fixed 0.9 ask for above upper limit ranges of implied probability to the (ThalesAMM.sol)[https://optimistic.etherscan.io/address/0x5ae7454827D83526261F3871C1029792644Ef1B1] contract across all supported networks.
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