CVEX takes a proactive and comprehensive approach to on-chain security and risk prevention. This article outlines our meticulous strategies to safeguard our users and their assets, ensuring a secure trading environment on our platform.

Smart Contract Audits: The First Line of Defense

At CVEX, we recognise the critical role smart contracts play in maintaining the integrity and security of our platform. To this end, our smart contracts are rigorously audited by leading third-party security firms specialising in blockchain technology. These audits are designed to detect any vulnerabilities and ensure that the contracts operate precisely as intended, providing a robust foundation for our security framework.

Decentralised Security Measures

Leveraging the inherent security features of blockchain technology, CVEX ensures that all transactions and assets on the platform are secured against unauthorised access. We advocate for the use of hardware wallets and secure private key storage methods, offering our users guides and best practices to enhance their wallet security.

CVEX operates with clearly defined and transparent risk parameters embedded within our smart contracts. This transparency allows for effective risk mitigation strategies, ensuring that the risks associated with trading are well-managed and understood. Each user account is treated as an independent entity, allowing for precise risk management and safeguarding against systemic risk.

Empowering Users Through Education

We believe in empowering our users with knowledge. CVEX provides an extensive knowledge base, including documentation, tutorials, and resources focused on security best practices and risk management. Our commitment to continuous learning is reflected in our educational initiatives, such as webinars and real-time updates, aimed at keeping our users informed about the latest developments in blockchain security.

A well-informed community is a secure community. CVEX fosters a culture of security and risk awareness through active engagement with our users. We provide platforms for discussion, support, and the sharing of experiences and strategies, reinforcing the collective security of our ecosystem.

Conclusion

CVEX’s approach to on-chain security and risk prevention is rooted in a commitment to providing a safe, transparent, and efficient trading environment. By combining rigorous smart contract audits, decentralised security measures, transparent risk management, and a strong focus on user education and community support, we aim to set a new standard for security in the DeFi space. Join us to create a secure and prosperous future for decentralised trading.

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Crypto Valley Exchange (CVEX) stands at the forefront of managing the dynamic challenges in decentralised finance. With a firm commitment to trader protection and market stability, CVEX implements an advanced liquidation protocol. This mechanism is a cornerstone of the platform, ensuring that the market’s integrity and the traders’ interests are preserved even during intense market fluctuations.

Margin Ratios as Safety Thresholds

On CVEX, liquidation is initiated when a trader’s margin ratio falls beyond 100%. This is a clear signal that the trader’s collateral is no longer adequate to cover the risks associated with their positions. CVEX deploys Clearance Bots to address this, which kickstarts a well-structured liquidation process. The objective here is to minimise market disruption and ensure that the values are recovered fairly, thus maintaining a balanced risk exposure.

A Layered Approach to Liquidation

CVEX’s liquidation protocol is intricate, featuring three distinct methods, each contributing to the overall stability of the market:

1. Market Order Liquidation with Liquidation Fee. The platform quickly executes market orders at the most favorable current prices. If a market order cannot be filled completely, it is withdrawn to mitigate any adverse impact on the market. The liquidation fee, set at approximately 2% of the position’s nominal value, is directed into the Default Fund, which stabilises reserves during market turmoil or liquidity crises.
2. Utilising the Default Fund. The Default Fund intervenes to fill the financial gaps when the liquidation proceeds are inadequate. Moreover, this fund is replenished with any surplus generated from liquidations, maintaining its capacity to stabilise the market in future scenarios.
3. Counterparty Liquidation via Auto Deleverage Queue. In extreme cases where other methods fall short, CVEX resorts to Counterparty Liquidation. This method systematically reduces counteracting positions in the market, ensuring equilibrium is restored. It’s a crucial tool, used only when necessary, to maintain market integrity.

About Clearance Bots

The Clearance Bots in CVEX’s ecosystem are pivotal. They are programmed to respond swiftly in high-risk scenarios and rewarded through a portion of the liquidation fees. Their prompt actions are crucial for maintaining the market’s equilibrium and stability. A portion of the Liquidation Fee is set aside as a reward for the Clearance Bots. Generally, this is about 0.5% of the liquidated position’s nominal value, which the Platform Operator sets.

Counterparty Liquidations — Your Ultimate Safety Net

Counterparty Liquidations are rare yet essential procedures activated under extreme conditions. These liquidations are meticulously designed to be fair and immune to market manipulation. While CVEX strives to avoid this last-resort measure, its existence is vital for upholding market integrity in unpredictable scenarios.

What Is the Default Fund?

The Default Fund is a key component of CVEX’s liquidation arsenal. It plays a significant role in absorbing the shocks of defaults, thereby lessening the need for Counterparty Liquidation. Its presence and management are central to ensuring a stable trading environment on CVEX.

Conclusion

CVEX’s comprehensive liquidation protocols embody the platform’s dedication to providing a secure and fair trading environment. These measures are thoughtfully crafted to manage risks and uphold market stability, reinforcing CVEX’s position as a reliable and forward-thinking player in the decentralised finance domain.

CVEX’s liquidation safeguards constitute a comprehensive protocol that mitigates risks posed by extreme market volatility. This systematic approach to risk management ensures market stability and fairness, making CVEX a secure and reliable platform for traders in the decentralised finance space.

This intricate system of checks and balances reflects CVEX’s commitment to providing a trading environment where risks are managed effectively, ensuring the safety of traders and the overall market even under turbulent conditions.

In the dynamic world of decentralised finance, technology selection is pivotal. Crypto Valley Exchange (CVEX) has chosen Arbitrum Stylus for developing its smart contracts, driven by its efficiency, power, and adaptability. This decision significantly enhances the platform’s robustness, benefiting our users in multiple ways.

Combining Best Features for Peak Efficiency

Arbitrum Stylus stands out by integrating the strengths of well-established programming languages like Rust while maintaining compatibility with the Ethereum Virtual Machine (EVM). This unique combination enables us to craft smart contracts that are not only robust but also highly efficient, setting a new standard in the realm of smart contract development.

Bridging Ecosystems through EVM Compatibility

An advantage of adopting Arbitrum Stylus is its compatibility with the CCTP and ERC-191, which is pivotal in enhancing user accessibility on CVEX. This compatibility ensures that users from various blockchain ecosystems, including Ethereum, Arbitrum, Base, and Optimism, can easily trade on our platform.

The integration with EVM allows users to trade across these diverse ecosystems with ease, transferring funds from one to another. This interoperability eliminates the barriers and complexities associated with cross-blockchain transactions. Users can enjoy a seamless trading experience, leveraging the strengths of each blockchain while still operating within the familiar environment of the Ethereum ecosystem.

Technological Leap in Computation and Memory Usage

The use of Arbitrum Stylus marks a technological advancement, with computation becoming over ten times more efficient and memory usage drastically reduced compared to traditional EVM approaches. This enhancement allows users to achieve the same level of user experience that exists on centralised DeFi products.

Optimisation for Lower Transaction Costs

One of the key benefits of incorporating Arbitrum Stylus is the significant reduction in gas usage. This optimisation translates directly into lower transaction costs for our users, addressing one of the most pressing concerns in the blockchain space — the high expense of gas fees.

Future-Readiness with Arbitrum Stylus

Our adoption of Arbitrum Stylus is not just a solution for present challenges; it’s a strategic move to future-proof the CVEX platform. As computational demands continue to evolve, our platform remains efficient and cost-effective, ensuring that we stay ahead in the rapidly advancing DeFi sector.

Enhancing Security and User Experience

Security and scalability are important in decentralised finance. Arbitrum Stylus strengthens these aspects with its advanced architectural design, which enhances security and reduces vulnerabilities.

In conclusion, the choice of Arbitrum Stylus is a testament to CVEX’s commitment to innovation and excellence in the DeFi space. By prioritising efficient technology, user-friendly experiences, and future-readiness, CVEX is not just participating in the DeFi revolution; it’s leading it. Our platform continues to evolve, always keeping our users’ needs and the ever-changing market dynamics in mind.

The world of cryptocurrency trading has witnessed the rise of perpetual contracts as a popular derivative product. However, their inherent disadvantages, compared to deliverable futures contracts, are increasingly becoming evident. Originating outside the cryptocurrency realm, perpetual contracts are often compared to financial instruments like CFDs and rolling spot FX contracts*, yet they bear distinct characteristics. A common myth is that they were invented in the crypto ecosystem, which is not the case.

*A little note:

CFDs (Contract for Difference):

CFDs are financial contracts that let you bet on the price movement of assets like stocks or currencies. You don’t own the asset; instead, you predict whether its price will go up or down. Your profit or loss is the difference in price from when you open to when you close your trade.

Rolling Spot FX Contracts:

These are contracts for trading currencies without a fixed end date. You can keep the trade open as long as you want, settling in cash based on the currency price changes. They’re popular in forex trading for their flexibility.

Key Drawbacks of Perpetual Contracts

Perpetual contracts have some significant problems. One big problem is that they don’t use money wisely. Most markets find it hard to trade many different types of perpetual contracts effectively. This problem becomes even more noticeable when it comes to hedging strategies. Hedging is like insurance against price changes, but perpetual contracts aren’t flexible enough for this. They’re not good for a type of hedging called ‘delta hedging,’ which is about reducing the risk of price changes in options. This limitation stops the options market from growing and becoming stronger.

Furthermore, perpetual contracts owe their success in the cryptocurrency environment to their ease of implementation within DeFi frameworks. Processes like simple margin calculations and integrated lending are easier to implement for perpetual contracts than a proper clearing mechanism. But, this simplicity comes at a cost, introducing its own set of challenges.

Design Issues and Market Risks

Perpetual contracts often rely on failed trades to fund lending pools in many protocols, a design that inherently favors retail failures over successes. This leads to inappropriate margin levels relative to market volatility, skewing the market and undermining the value for long-term hedging. Additionally, the risk management model in perpetual markets often results in imbalanced market conditions, especially in low-volatility scenarios. This poses risks for users employing these products as long-term hedges.

In markets dominated by perpetual contracts, the tendency of speculators to take one-sided positions increases exit costs and assigns disproportionate market risk, potentially leading to market instability. Poor market dynamics for market makers and skewed reward systems further exacerbate these issues.

The Future: A Shift to Futures

In light of these limitations, the crypto environment is gradually recognising the need for a shift towards futures contracts. Futures, unlike perpetual, are more capital-efficient and offer greater flexibility in hedging strategies. Their design and implementation, though complex, provide a more stable and balanced approach to market risk.

Futures contracts are widely adopted by institutional markets and are considered more effective for comprehensive risk management. Their adoption of Futures contracts is crucial for bringing more capital into the cryptocurrency ecosystem and supporting the incredible projects within it.

Conclusion

While perpetual contracts offer simplicity and ease of use, their significant challenges in terms of capital utilisation, hedging flexibility, and inherent risk in their funding and margin models are leading to a shift in preference toward futures contracts. This transition is essential for the advancement of the cryptocurrency ecosystem, ensuring better risk management capital flow optimisation and attracting more institutional participation. Futures, with their established structure and efficiency, are aimed to replace perpetual as the preferred derivative product in the evolving world of cryptocurrency trading.

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Leverage is a critical concept in trading, especially on the Crypto Valley Exchange (CVEX) platform. It allows traders to amplify their market presence significantly, offering opportunities to maximise gains from their trades. CVEX, operating on the innovative Arbitrum, introduces a sophisticated margin management system that employs a Value at Risk (VaR) model, ensuring stability and security during market fluctuations.

Understanding Leverage on CVEX

On CVEX, leverage is not a one-size-fits-all solution; it is thoughtfully tailored to suit different asset classes. In the realm of cryptocurrencies, leverage typically ranges from 5x to 9x. This range is meticulously calculated based on 1 day at a 99% confidence level, illustrating a robust and thoughtful approach to risk management. For commodities trading, CVEX offers a variable leverage system. This system considers the distinct volatility profiles of each commodity, providing traders with flexibility and precision in their trading strategies.

A Strategic Approach for Leverage and Hedging

The platform takes the concept of leverage further through hedging strategies. By balancing positions across correlated assets, traders can access higher leverage levels. For instance, combining positions in ETH and BTC could allow traders to leverage up to 15x, thereby enhancing their potential returns. This strategy optimizes returns and mitigates risks associated with individual asset volatility.

For seasoned traders managing large, well-hedged options portfolios, CVEX’s capabilities shine even brighter, offering leverage up to an astonishing 1000x. This feature demonstrates CVEX’s commitment to supporting sophisticated and varied trading strategies, catering to the needs of advanced traders.

Safety Measures and Continuous Improvement

CVEX prioritizes the safety and security of its users. The platform’s leverage ratios and trading specifications are continuously reviewed and refined. This iterative process ensures that they align with the evolving interests of both the protocol and its users. Leverage, while a powerful tool, requires careful and informed use. CVEX is dedicated to maintaining a secure and transparent trading environment, continually adapting and improving to meet the needs of its diverse user base.

Staying Updated with CVEX

As with any trading tool, staying informed and educated is key to leveraging effectively. CVEX encourages its users to stay updated with the latest developments and educational resources provided through its official channels. This ensures that traders can make informed decisions and utilize leverage to its full potential while being mindful of the risks involved.

In Conclusion

In conclusion, leverage on CVEX is a dynamic and potent feature designed to suit various assets and accommodate different trading strategies. Its effective use hinges on understanding, skill, and caution. CVEX provides the tools and the environment for traders to maximize their trading potential, but it is up to the individual trader to navigate these waters skillfully and responsibly.

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In the intricate realm of cryptocurrency trading, options trading emerges as a multifaceted financial instrument, pivotal for risk management and capitalising on market probabilities. However, its transition into the crypto sphere, particularly within decentralised exchanges (DEXs), has been met with considerable challenges. This article delves into the complexities of options trading on CVEX, shedding light on the challenges, solutions, and the pioneering approach of the Crypto Valley Exchange in refining this market segment.

Understanding the Challenges

Inadequate Clearing and Settlement

Many crypto options platforms focus primarily on pricing mechanisms and margin integration, neglecting the critical aspects of clearing and settlement. These foundational processes are vital for the stability of financial trading systems yet remain underdeveloped in the crypto options sector.

The Virtual Market Maker Dilemma

Some platforms, under the guise of exchanges, operate as virtual market makers. They either provide liquidity for trades from funding pools or manipulate market prices to balance trades, akin to bookmakers. This approach, often obscured by complex language and front-end design, fails to address the core requirements of a mature options platform.

High Capital and Margin Costs

Establishing positions in crypto derivatives is notably capital-intensive compared to traditional markets. The absence of cross-margin capabilities in most platforms exacerbates this issue, making complex trades or spread positions prohibitively expensive.

Lack of Advanced Capabilities

The high cost of margin in existing platforms stifles the development of sophisticated products like options. Minor adjustments in implied volatility do not compensate for the high opportunity costs faced by market makers, hindering the growth of traditional options markets in the crypto domain.

CVEX’s Forward-Thinking Approach

Recognising these hurdles, CVEX is committed to fostering a robust and transparent options trading environment. Our platform is intricately designed to address the aforementioned challenges:

• Robust Clearing and Settlement Processes. CVEX places a strong emphasis on establishing mature clearing and settlement systems on-chain, ensuring the stability and functionality of our financial trading framework.
• Capital Efficiency and Cross-Margin Capabilities. We are dedicated to implementing efficient cross-margin capabilities, reducing the capital costs associated with trading derivatives, and enabling the execution of complex trades at a feasible cost.
• Transparent and Advanced Trading Solutions. Our platform aims to offer transparent and advanced trading solutions, drawing inspiration from platforms like Deribit, which, despite its challenges, showcases the demand for transparent and efficient options trading mechanisms.

Conclusion

Options trading in the cryptocurrency market stands at a crossroads, with CVEX leading the charge towards a more mature, efficient, and transparent future. By addressing the critical issues of clearing, settlement, and capital efficiency, and by fostering advanced trading capabilities, CVEX is not just participating in the market — we are shaping its future. Join us on this revolutionary journey with CVEX, where the potential of crypto options trading is fully realised.

Stay tuned for the latest updates and insights from CVEX as we continue to lead the charge in transforming the crypto trading landscape. Visit our website and follow us on social media to be part of the future of decentralised finance.