Introduction
Our primary goal with Omni has always been to create the best platform for retail traders. A key part of that goal is offering the markets that retail traders want to trade. While expanding the number of token listings has been our current priority, we've also seen a growing appetite for less traditional markets, like volatility indexes. Omni's design, with the Omni Liquidity Provider (OLP) at its center, is uniquely suited to support not just thousands of tokens, but also these exotic and novel markets.
Challenges of Listing New Markets
Listing new markets, especially less common ones, is difficult for several reasons. First and foremost, new markets often face a "cold start" problem. Market makers are hesitant to provide liquidity for assets with low trading volume, but traders are hesitant to trade assets with low liquidity due to high spreads, and the possibility for excessive volatility and liquidations. This creates a chicken-and-egg scenario that can stifle the growth of new markets.
Even with willing market makers, platforms need infrastructure to handle the unique challenges these novel markets can present. Some examples of this necessary infrastructure include sourcing robust underlying price feeds, an efficient margin and liquidation system, and the ability to manage volatility/liquidations without risking widespread contagion. Exotic markets, with their potentially unique characteristics and behaviors, require careful consideration in terms of platform design and risk management.
How Omni Lists New Markets
Omni has been carefully designed to address these challenges and allow for the seamless listing of exotic markets through the integration of OLP and the use of isolated settlement pools.
OLP
OLP eliminates the need to find external market makers willing to quote on new or exotic markets. Instead, listing a new asset on Omni simply requires two things: a reliable, low-latency underlying index price feed and algorithms for OLP to calculate spreads and risk. This streamlined process allows Omni to quickly and efficiently list new markets, providing immediate liquidity for traders.
OLP can also take on the burden of linearizing complex assets. For instruments like volatility indices or funding rates, the raw data often needs to be transformed into a tradable linear instrument. As part of the design of OLP’s quoting models for new markets, we can construct simple instruments for complex structures.
For a comprehensive overview of OLP, see “The Omni Liquidity Provider (OLP) Explained.”
Isolated Risk
OLP posts margin in each user's isolated, on-chain settlement pool. This isolates risk – even if a trader experiences significant losses on a volatile asset, it won't directly impact other users on the platform. This is crucial for supporting exotic markets that may experience periods of high volatility. Platforms without this isolation risk socialized losses and may be hesitant to list less conventional assets.
For more on how Omni protects users from contagion, see “Protecting Users from Bad Debt.”
Examples of Exotic Markets
While our near-term focus with Omni is still on expanding the set of listed token underlyings, we’ve already considered the process of quoting and listing many less traditional markets. Some examples of potential markets launching in the future include:
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Baskets
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Volatility Indices
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Funding / Interest Rates
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NFTs
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In-Game Items / Currencies
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Social Metrics / Mindshare
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Cost of Gas
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Hashrate
This list is just scratching the surface. Because OLP provides the initial liquidity to each new market, Omni can list new markets and make them tradable from day one, even without pre-existing volume or external market maker interest. This allows Omni to bootstrap liquidity and open up trading on assets that would otherwise be inaccessible. A core mission of OLP is to be on the frontier of new listings, prioritizing markets requested by the Omni community and markets our team predicts high demand for.
Conclusion
Omni's unique architecture makes it possible to list a vast set of exotic markets. We envision a future where any underlying time series, from baskets and indices to social metrics, can be traded as a perpetual contract.
We believe this unlocks immense potential, offering access to new markets and opportunities where retail traders can find an edge. From trading perpetual contracts on the hashrate of Bitcoin, the price of in-game items of popular games, or even the social sentiment around a popular account on crypto Twitter, Omni can support markets for all kinds of traders.
By removing the barriers to listing new and exotic markets, Omni is paving the way for a new era of trading, where everything can be fairly traded by all traders.
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