Circuit Breaker
Security and stability
Circuit Breaker aims to protect Traders and FLP holders under temporary market fluctuations.
What is Circuit Breaker?
Circuit Breaker is designed to minimize the impact of market volatility on trading activity and protect users from significant losses. It will be implemented within the Fulcrom trading platform and monitor market conditions and trading activity in real-time. When triggered, Circuit Breaker will pause trading activity and prevent any new orders from being placed until market conditions stabilize.
When will Circuit Breaker be triggered?
Circuit Breaker will be triggered under two conditions:
1. Market volatility
Our keeper bot monitors individual token price in real time. When there is a 20% drop in price of token(s) within 5 minutes, Circuit Breaker will be triggered and applied to the affected token(s).
2. Imbalanced short-to-long open interest ratio
When a token's short open interest is over a set threshold, and if the ratio of short open interest to long open interest is larger than 2, Circuit Breaker will be triggered and users will not be able to open short positions on the token(s) temporarily. See the table below for details:
Cronos
| Token | Short Open Interest Threshold | Short-to-long Open Interest Ratio |
|---|---|---|
BTC | USD 200,000 | >2 |
ETH | USD 200,000 | >2 |
ADA | USD 150,000 | >2 |
ATOM | USD 150,000 | >2 |
XRP | USD 150,000 | >2 |
LTC | USD 150,000 | >2 |
BCH | USD 150,000 | >2 |
SOL | USD 150,000 | >2 |
zkSync Era
| Token | Short Open Interest Threshold | Short-to-long Open Interest Ratio |
|---|---|---|
BTC | USD 200,000 | >3 |
ETH | USD 200,000 | >3 |
Please note that currently Circuit Breaker does NOT apply when the ratio of long open interest to short open interest is larger than 2.
What will happen when Circuit Breaker is triggered?
When Circuit Breaker is triggered, all trading activities of the affected pair(s) will be paused for 15 minutes.
You will see the following pop-up for the affected trading pair(s):
During the period:
You will not able to open new market order for the affected token(s)
You will not able to open new limit order for the affected token(s)
You will be able to close existing position for the affected token(s)
The circuit breaker has a predetermined time-out period for 15 minutes, after which it will be automatically lifted and trading activities will resume.
There will be a manual feature to override the predetermined timeout period if it requires more time to implement a solution.
How will this benefit me as a Fulcrom user?
As a Trader
When token price drops for 20% in 5 mins, there is a high chance that the price spread is large, causing users to accidentally open trade or swap tokens at an unfavourable price.
Circuit Breaker protects traders from sudden and drastic price movements. They provide a temporary halt in trading, which allows investors to regroup, evaluate their strategies, and make more informed decisions. This helps prevent investors from making rushed or emotionally-driven trades during highly volatile market conditions.
As a FLP holder
Circuit Breaker will help stabilize FLP status from market volatility and prevent the liquidity on our FLP pool to be drained away.
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