The solution to standardised derivative markets is tracers. Because tracers come from market templates, anyone can deploy a tracer and know that it will function as designed, within the parameters they set. Tracers encourage more (and better) derivatives trading. They allow for competition between markets to determine the optimal market variables. Deploying them is quick, easy, and cheap. If a tracer isn't performing well, someone can spin up a new one. And they don't need permission to do it.
This simple process is made possible by Factory contracts. Every new market design (like Perpetual Pools or Perpetual Swaps) is launched as a contract template with its own Factory.
Potential deployers can access a Factory and interact with its template. When they provide inputs like the price feed (oracle address) and leverage multiplier, the Factory generates a tracer.
Factory contracts have everything needed to make derivative markets that run on a blockchain. They can even incorporate other financial contracts that interact with the market templates, like an automated market maker (AMM). Only Tracer DAO can make changes to a Factory, so the templates won't change unless a vote to modify them passes. If there are any changes to the Factory, it won't affect existing tracers. Tracers are made to run independently and have to elect the DAO to control them.
Any derivatives market, whether it already exists or is completely novel, can be made into a contract template. But it needs to be approved by Tracer DAO before it is launched with a Factory. The main job of Tracer DAO is to maintain and upgrade Factories, and seek out new ones. Templates that work will be (inevitably) added and its creator remunerated. That's how the Factory structure encourages financial innovation.
Last modified 1mo ago
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