Price Oracle and Spread Mechanism

While Fulcrom’s trade prices and liquidations are determined by our own internal oracle, we actively reference the Pyth price feed to validate and calibrate our pricing for accuracy and reliability..

This means that while Fulcrom isn’t directly priced by Pyth, Pyth plays a critical role in ensuring our pricing remains fair and aligned with the broader market.

When the difference between our oracle price and Pyth’s price exceeds a certain threshold (currently 2.5%), a price spread may be applied. This spread helps protect the liquidity providers and maintain platform stability during volatile market conditions. Liquidation is triggered when price reaches the minimum value in that spread range.

For example, if our oracle price is close to Pyth’s price within the threshold, we use our oracle price directly. But if the difference is larger, we adjust the price by applying a spread to manage risk.

This mechanism can sometimes cause slight differences in price action and liquidation points compared to what users see on charts that rely solely on Pyth prices.

We are continuously reviewing and optimizing this system to balance user experience with platform safety.

TLDR = Fulcrom uses its own oracle, but checks Pyth to stay accurate. If our price is >2.5% from Pyth, we apply a spread to protect LPs and the platform. This can cause minor price or liquidation differences vs. Pyth-based charts. We're fine-tuning the system for fairness and safety.

Why doesn’t Fulcrom just use Pyth’s price oracle directly?

While Pyth is a highly reliable and respected price source, relying on a single external oracle alone can expose the platform to risks like delays, outages, or price manipulation attempts.

By maintaining our own internal price oracle and comparing it with Pyth’s prices, we create an additional layer of security and control. This approach helps us:

• Ensure price stability and protect liquidity providers

• Quickly detect and respond to unusual price movements

• Apply protective spreads when there’s significant price difference, reducing unexpected liquidations

TLDR = Using both oracles together helps us provide a safer, more reliable trading experience for you.