⛏️Portfolio Margining Strategies

By allowing an arbitrary number of trades from a single balance, Fermi allows MM's to compete in designing the best portfolio margining strategies

Portfolio margining is a technique to determine probabilistic corelations between the price movements of different assets. Effective portfolio margining strategies can determine which orders are not likely to be filled simultaneously, allowing MMs to place opposing trades on various markets with high confidence that the liquidity for those orders will not be needed at the same time.

By separating order creation from liquidity provision, we allow market makers to experiment with various strategies of portfolio margining, to better utilise their capital, and earn a higher ROI. Faulty strategies will cause market makers to fail to provide liquidity to one or more orders, incurring a penalty. Over time, the market will select for the most effective margining strategies employed by market makers.

At Fermi, in the future, we may even incorporate in-built margining strategies, to allow LPs to easily evaluate the combined risk of various open positions that they may have across markets. Further, customisable settlement periods can allow makers sufficient time to fill multiple trades with the same liquidity, even if the orders are filled near-simultaneously.