4. Solutions Overview
Last updated
Last updated
At Trivex, we offer crypto contracts that allow users to trade using cryptocurrency. Users deposit crypto (USDC) into our platform and can take long or short positions by executing contracts. Simultaneously, when a user places an order, we leverage our internal systems along with the exchange API to execute a corresponding order on the exchange as collateral.
To ensure liquidity for trading, USDC lenders provide USDC loans to our platform and yield APY return, which is generated from borrowed interest very similar to staking. When crypto users trade crypto, they essentially pledge USDC as collateral to borrow an equivalent amount of USDC at the corresponding exchange for trading for any unmatched order. As a result, a borrowing interest fee (position maintenance fee) is charged every 8 hours.
For interest-rate determination, we have introduced the Automated Market Balancer (AMB) system as the core of our interest rate model. The model dynamically adjusts interest rates based on the liquidity occupation rate: when available liquidity in the pool is heavily utilized, borrowers must pay higher interest rates. These additional fees are distributed to liquidity providers, increasing their returns and incentivizing more providers to supply liquidity, thereby expanding our liquidity pool. As liquidity increases, the liquidity occupation rate decreases, leading to lower borrowing interest rates, which further incentivizes traders to execute more trades. This mechanism ensures continuous liquidity growth, enabling a higher volume of trading.
If the USDC liquidity pool at third party becomes insufficient to support excessive trading demand, we utilize a third party conversion service to convert bridge the USDC to the third party exchange for order execution. Consequently, while the interest rate increases with liquidity utilization, it stabilizes once a threshold is reached, at which point trading fees transition into conversion costs. This ensures that all user trade requests can be fulfilled without disruption.
In the Trivex trading platform, we have innovatively introduced the Internal Order Book (IOB) system. When a transaction occurs, there are two portion of fees which are the Trivex fee and AMB fees. The Trivex fee is the portion of fee the users towards using the Trivex platform which the main source of revenue of Trivex. The AMB fees is primary consists of costs involved such as the third-party exchange transaction fees and interests paid towards the liquidity stake providers for any unmatched orders. The effect of the IOB system is to eliminate the third-party fees incurred during the transaction process, converting this portion into Trivex’s revenue as well as reducing the fees charged towards the user.
Trading Fee = Trivex Fee + AMB Calculated Fees
The role of IOB is to directly hedge opposing positions within the Trivex platform, using funds from the losing side to cover the funds on the profitable side, with settlement conducted in cryptocurrency.
For example, if user A opens a long position of 1000 USDC in STRK, Trivex will open an equivalent position under standard procedures. If later, user B opens a short position of 100 USDC in STRK, IOB will close 100 USD worth of the original long position at the price at which user B placed the order. This reduces the actual USDC usage on the third party platform, which in turn lowers the borrowing costs associated with that position. This will also reduce the costs of opening and closing a new position at the exchange as it reduces the transactions needed, thereby increasing Trivex’s profitability. However, the 100 USDC closed position will not be converted into liquidity reserves but instead will be locked as a margin. When one of the parties settles their position, we will use the margin to open a new position in the opposite direction to the original position. For instance, if the short position is closed, the profit or loss from the short position will be settled, and the original long position will lose its hedge. In such cases, we will restore the original position’s hedge.
An ideal scenario occurs when both the long and short positions for the same asset are opened simultaneously. After matching the trades, a portion of the transactions will be directly hedged internally on the platform. This will significantly enhance Trivex’s profitability.
Therefore, when the IOB system is activated, the actual capital usage on the platform and the transaction costs will decrease. As a result, users’ fee expenditure will be reduced, simultaneously increasing our platform’s earnings. According to the IOB economic model, as trading volume increases and more hedge positions are generated, or during market fluctuations, Trivex’s profitability will improve as there are more opposing positions.
In addition to the wide range of products offered to users, Trivex features a strategy marketplace, a marketplace of trading strategies that help users determine what to trade and when. Users are divided into two roles: creators and users. Creators provide APIs or code for algorithmic or AI-powered strategies and, in return, receive a share of the revenue generated from their strategy usage. Users, on the other hand, pay a fee to run these strategies. This fee is split between the creator and Trivex, contributing to the platform’s revenue stream.
To support unmatched orders, Trivex may need to borrow funds from third-party platforms. Each integrated platform provides its own staking pool. Every three days, 70% of the pool is converted to the corresponding platform's liquidity and made available for user trades. In return, an APY is charged to trading users and distributed to the staking providers as a reward. This reward is calculated based on AMB system.