Market Parameters

Epoch

An epoch is a fixed, repeating time window used to organize trading, finalize outcomes, and distribute payouts. For example, in 15 minute markets, each epoch lasts 15 minutes. At the end of the 15 minute epoch the resolution price is determined, the market is settled, and payouts are distributed.

Price to Beat

The price to beat is a rolling strike price based on the last price from the previous epoch.

Current Price

The current price is the price of the underlying spot asset supplied by the Oracle, in this case Pyth.

Resolution Price

The resolution price is the price of the underlying spot asset used to settle the market. In 15 minute markets, a price snapshot is taken every second in the last minute. The average of the 60 snapshots, one for each second, is used to determine settlement. If the average is above the price to beat, Up wins. If the average is below the price to beat, Down wins.

Contract Price

There is one contract for Up and Down. Up is long the contract price. Down is short the contract price. It resolves to $1 if Up wins and 0 if Down wins. The contract price is the midpoint of the best bid and ask on the order book. The minimum acceptable contract price in the exchange is $0.001 and the maximum acceptable contract price is $0.999. This means a bid can't be less than 0.1 cent and an offer can't be greater than 99.9 cents.

Tick Size

The minimum price change in the exchange. The tick size for short duration markets is 0.1 cents and 1 cent or higher for longer duration markets. This means in short duration markets, prices can only be quoted at the nearest tenth of a cent.

Margin

The amount of USD posted as collateral to open and maintain open a position. All open positions and resting limit orders are fully collateralized. Opposite side orders do not offset each other's margin requirement. This prevents the margin exchange from having to liquidate orders and ensure full payout to the winner of the contract. Since all open positions are fully collateralized, there are no margin calls.

The formula for calculation the margin requirement of an order to open a position is as follows

margin for long = # of Contracts * Contract Price

margin for short = # of Contracts * (1 - Contract Price)

Therefore, losses for a position are capped at margin and % returns are measured against margin.

To post a resting limit order a user needs to have enough USD in his wallet to post margin. However, marketable orders that offset an existing position (i.e. a an order that reduces a position) uses the existing position to offset the margin requirement.