[ liquidity providers · you are the counterparty · Arbitrum One limited beta ]
Liquidity provision: the pool is the counterparty
The PPI perpetual market has no external market maker. Traders trade against a pool, and the people who deposit into that pool take the other side of every position. This page documents the exposure before any deposit.
1. Where the money comes from (and goes)
| Flow | direction | when |
|---|---|---|
| Open / close fee (0.10% of notional) | → pool | every trade |
| Funding | → pool | when traders are net long |
| Traders' net profit | ← pool | when they win |
| Liquidation remainder (half) | → pool | when a position is liquidated |
The pool's return is therefore fees + funding − trader PnL. The first two are
small and steady; the third is large and can be negative for months.
2. What the pool is short
When traders are net long, the pool is net short the commodity index. A rising index costs the pool money; a falling index makes it. That is a real directional exposure, not a rounding error.
3. A worked losing month
Setup: pool $1,000,000. Traders are net long $2,000,000 notional (2× the pool).
| Month: index +6% | traders' PnL = 2,000,000 × 6% = +$120,000 |
| Fees at $20m monthly volume, 0.2% round trip | +$40,000 |
| Funding received (illustrative) | +$15,000 |
| Pool result | −$65,000 (−6.5%) |
In the opposite month (index −6%) the pool earns roughly $55,000 + fees. The distribution is wide; a $1,000 deposit could be worth meaningfully less after a strong rally.
4. Why the pool may be safer than a naive perp pool
Margin here is driven by data quality, not only by price. When the commodity feeds disagree or go stale, the market raises margin requirements and blocks new positions, so a bad print cannot be liquidated through the pool. That reduces one specific loss mode (oracle-driven liquidation cascades). It does not reduce directional risk: if the index genuinely rises, the pool still pays.
5. Who should not deposit
- Anyone who needs the principal back on a known date.
- Anyone who cannot look at a −10% month without withdrawing at the bottom.
- Anyone who treats the LP position as a fixed-yield savings product.
Deposit / withdraw
pool —
not connected
balances —
connect a wallet on Arbitrum One
Depositing makes you the counterparty to every trade. Read sections 1–5 above before you press deposit. Withdrawals are blocked while open interest needs the capital (the pool cannot leave traders unpaid).
Status
The market is deployed on Arbitrum One (perpetual on the PPI index, real USDC collateral). The pool is empty until the first deposit - that deposit is what opens the market. The contracts are self-audited, not externally audited; the full review is in the repository.