Protocol Rules

# Trader Rules

Traders can interact with S&F through OTC trades or market trades.

See OTC and Market for the user-facing explanation of the two paths, or OTC Issuance and Redemption for the settlement flow.

# OTC trades

An OTC trade mints or burns tokenized perpetual exposure directly through the protocol pool.

Entering an OTC trade requires locking collateral. Exiting an OTC trade requires locking the synthetic asset. In both cases, the trade settles at the next oracle price and must then be claimed.

This two-step process prevents oracle latency attacks, where a trader could otherwise try to settle against a stale price while knowing the next price.

If the trade is not claimed during the expected round, it can be canceled.

# Market trades

A market trade is a regular secondary-market swap. It executes immediately, is priced by the DEX pool, and can have slippage.

Synthetic assets minted by S&F are fungible position tokens, so they can trade in secondary markets like other tokens.

# Fees

Traders pay swap fees on trades and pay or earn funding rate while holding synthetic exposure. See Fees for the full rules.