Liquidity Risk
Overview
Section titled “Overview”Liquidity risk is the risk that users cannot execute trades at fair prices due to insufficient market depth. PIPO manages liquidity through AMM design, LP incentives, and platform operations.
Liquidity Sources
Section titled “Liquidity Sources”Primary: AMM Pools
Section titled “Primary: AMM Pools”AMM Liquidity Structure:
Pool Composition:├── Warrant Tokens (supply side)├── USDC (demand side)└── LP tokens (ownership claims)
Sources:├── Platform seed liquidity (initial)├── External LPs (ongoing)├── Put writers (USDC side)└── Arbitrageurs (rebalancing)Secondary: OTC Desk
Section titled “Secondary: OTC Desk”OTC Desk (VIP Only):
For orders >$100K:├── Dedicated trader assistance├── Block trade execution├── Reduced price impact└── Custom settlement optionsLiquidity Metrics
Section titled “Liquidity Metrics”Key Indicators
Section titled “Key Indicators”| Metric | Definition | Target |
|---|---|---|
| TVL | Total pool value | >$100K per series |
| Depth | 2% price impact trade size | >$10K |
| Utilization | Volume / TVL | 20-100% |
| Spread | Bid-ask difference | <3% |
Monitoring Dashboard
Section titled “Monitoring Dashboard”┌─────────────────────────────────────────────────────────────────┐│ LIQUIDITY HEALTH │├─────────────────────────────────────────────────────────────────┤│ ││ Overall Status: 🟢 HEALTHY ││ ││ By Market: ││ ┌────────────────────────────────────────────────────────┐ ││ │ Market │ TVL │ Depth │ Util │ Status│ ││ │─────────────────────────────────────────────────────── │ ││ │ SPACEX-CALL-200B │ $350K │ $15K │ 45% │ 🟢 │ ││ │ SPACEX-CALL-180B │ $280K │ $12K │ 62% │ 🟢 │ ││ │ SPACEX-PUT-150B │ $120K │ $8K │ 35% │ 🟢 │ ││ │ OPENAI-CALL-100B │ $85K │ $5K │ 28% │ 🟡 │ ││ │ STRIPE-CALL-65B │ $45K │ $3K │ 22% │ 🟡 │ ││ └────────────────────────────────────────────────────────┘ ││ ││ Low Liquidity Alerts: ││ ├── STRIPE-CALL-65B: Below $50K TVL threshold ││ └── Recommendation: Increase LP incentives ││ ││ [View Details] [Adjust Incentives] [Add Seed Liquidity] ││ │└─────────────────────────────────────────────────────────────────┘LP Incentives
Section titled “LP Incentives”Points System
Section titled “Points System”LP Rewards Program:
Base Points:├── 1 point per $1 per day in pool└── Example: $10K for 30 days = 300,000 points
Multipliers:├── Early LPs (first month): 2x├── Low-liquidity pools: 1.5x├── Long-term lock (90 days): 1.3x└── VIP status: 1.2x
Points Utility:├── Future token airdrop eligibility├── Fee discounts├── Priority access to new markets└── Governance participationLP Returns
Section titled “LP Returns”LP Revenue Sources:
1. Trading Fees (0.25% of volume): ├── Pool TVL: $100K ├── Daily volume: $20K ├── Daily fees: $50 └── Annualized: 18.25% APY
2. Points Value (TBD): └── Estimated: 5-20% additional
3. Impermanent Loss: └── Risk: -5% to -20% in volatile markets
Net Expected Return:├── Bull market: 15-30% APY├── Stable market: 10-20% APY└── Bear/volatile: 0-15% APYLiquidity Crisis Management
Section titled “Liquidity Crisis Management”Triggers
Section titled “Triggers”| Condition | Severity | Response |
|---|---|---|
| TVL < $50K | Warning | Increase incentives |
| TVL < $25K | High | Platform adds seed |
| Utilization > 150% | Warning | Monitor closely |
| Single LP > 50% | Warning | Diversification push |
Response Protocol
Section titled “Response Protocol”Liquidity Crisis Response:
Level 1 - Low Liquidity Warning:├── Display warning to users├── Increase LP points multiplier├── Reach out to large LPs└── Consider platform seeding
Level 2 - Critical Low Liquidity:├── Platform adds emergency seed liquidity├── Pause large orders (>$10K)├── OTC desk referral for large trades└── Communication to users
Level 3 - Liquidity Emergency:├── Pause new positions├── Allow exits only├── Emergency LP recruitment└── Post-mortem analysisSlippage Management
Section titled “Slippage Management”User Protection
Section titled “User Protection”Slippage Settings:
Default: 2%├── Suitable for most retail trades└── Protects against minor price movements
Custom Options:├── 0.5%: For stable markets, may fail├── 1%: Conservative├── 2%: Standard├── 5%: For volatile markets└── Custom: User-defined
Transaction Behavior:├── If slippage exceeded: Transaction reverts├── User funds returned (minus gas)└── Can retry with higher tolerancePrice Impact Preview
Section titled “Price Impact Preview”┌─────────────────────────────────────────────────────────────────┐│ TRADE PREVIEW │├─────────────────────────────────────────────────────────────────┤│ ││ Buy SPACEX-CALL-200B-Q42025 ││ ││ Amount: $5,000 USDC ││ ││ Price Impact: ││ ├── Current Price: $0.350 ││ ├── Your Price: $0.358 ││ ├── Price Impact: 2.3% ││ └── Status: 🟡 Moderate ││ ││ Breakdown: ││ ├── Tokens Received: 13,966 ││ ├── Effective Price: $0.358 per token ││ ├── Trading Fee: $15.00 (0.3%) ││ └── Total Cost: $5,015.00 ││ ││ ⚠️ Consider splitting into smaller orders for better price ││ ││ Slippage Tolerance: [2%] ▼ ││ ││ [Execute Trade] [Cancel] ││ │└─────────────────────────────────────────────────────────────────┘Market Making
Section titled “Market Making”Platform Market Making
Section titled “Platform Market Making”Platform as Market Maker:
Role:├── Provide initial liquidity (seed)├── Maintain tight spreads├── Absorb temporary imbalances└── Support price discovery
Limits:├── Max 30% of any pool├── Profit returned to treasury└── Transparent reportingExternal Market Makers
Section titled “External Market Makers”Professional MM Program:
Benefits:├── Reduced fees (0.1% vs 0.3%)├── API access (low latency)├── Dedicated support└── Custom integrations
Requirements:├── $500K+ committed├── Uptime SLA├── Spread requirements└── Monthly reviewAPI Reference
Section titled “API Reference”Get Liquidity Info
Section titled “Get Liquidity Info”const liquidity = await pipo.getLiquidityInfo('SPACEX-CALL-200B-Q42025');
// Response{ warrant: 'SPACEX-CALL-200B-Q42025', tvl: 350000, warrantReserve: 700000, usdcReserve: 245000, depth: { buy10K: 0.8, // 0.8% price impact buy50K: 4.2, // 4.2% price impact buy100K: 9.1 // 9.1% price impact }, utilization: 0.45, lpCount: 23, largestLP: 0.12, // 12% of pool status: 'HEALTHY'}Simulate Trade
Section titled “Simulate Trade”const simulation = await pipo.simulateTrade({ warrant: 'SPACEX-CALL-200B-Q42025', side: 'BUY', amount: 5000});
// Response{ inputAmount: 5000, outputTokens: 13966, effectivePrice: 0.358, priceImpact: 2.3, fee: 15.00, minimumReceived: 13687, // with 2% slippage recommendation: 'CONSIDER_SPLITTING'}