<aside> ⚠️ This page is a work-in-progress and is subject to change at any time.

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Overview

Sujiko is derivatives protocol focused on enabling on-chain perps for highly liquid NFT collections. Sujiko enables users to a) short NFTs and b) speculate on high-value NFTs that are too expensive for retail.

It allows users to take directional positions, akin to Binance perps, through 3 different liquidity mechanisms: a global vAMM, a decentralized orderbook and an auction mechanism for market orders.

Perps are hard. That’s before adding 400ms+ latency to every request and focusing on long-tail assets. The secret to Sujiko is in our approach to building a derivatives protocol, focusing on managing risk and tackling liquidity.

Liquidity

The long term goal is to enable leverage for positions however, at launch this just won't be possible due to initial risk parameters. At a later date, a maximum leverage of 10x will be available for highly liquid collections. For the majority of collections, leverage will be kept low at 1x — similar to Binance for low-cap perps.

As we scale up and introduce additional liquidity mechanisms, position limits per user and per market will be slowly lifted up.

The end goal is build our own h-vAMM, the Hybrid vAMM. It’s is an evolution of the simple constant-product AMM, Perp Protocol’s vAMM and Drift’s dAMM. It is composed of 3 parts:

Core vAMM

• The vAMM will be the primary liquidity source available at launch. The vAMM eventually will provide only backstop liquidity as the additional mechanisms go live.
• The vAMM implements the well-known constant product algorithm, x * y = k.
• It has inventory-adjusted artificial spreads and fees - if the protocol’s total exposure to a collection increases, the fee to increase the protocol’s exposure grows larger + the quoted price falls away from the index price.
• An hourly funding rate is implemented per vAMM, dependent on the vAMM’s inventory skew.

Decentralised limit orderbook (DLOB)

• The DLOB is a virtual orderbook that exists on-chain enabling several order types beyond just market orders.
• The DLOB provides this through a combination off-chain crankers and on-chain settlement.
  • Users can send limit orders which are registered on-chain.
  • Off-chain workers preserve the OB in memory. New orders are streamed to the workers.
  • When a user’s limit order is matched (for example through a market order from a user or when the vAMMs quoted price passes through), off-chain crankers will process this locally and submit transactions to the network to settle this on-chain.
  • Off-chain crankers will be rewarded a small amount for processing.

JIT auctions

• Taker orders are auctioned before being routed to the core vAMM. An overview of how the auction works is:
  • A user submits a market order.
  • It is first attempted to be matched with any orders on the orderbook. If there are no matching orders or there is size remaining after matching against limit orders, the remaining size will be routed to be auctioned.
  • It will be entered into a Dutch Auction with a start time, specific start price (oracle price), end price (vAMM quote price), and duration (fixed at 5s).
  • MMs compete to fill the user’s order at a price better than or equal to the current auction price.
  • If no MM fills the order within the duration or there is a partial fill therefore remaining size, the order can be filled by the vAMM.

Starting with v1, we have 3 major releases of Sujiko planned introducing each liquidity mechanism.