📖Opening Trades

Traders can start trading a wide variety of assets and leverage levels.

User Flow

• Traders have the option to select collateral, exposure, leverage, as well as stop losses and take profits. The protocol supports market, limit, and stop orders at open.

• Prices are called on-demand, either via Chainlink low-latency oracles or Ostium's custom oracle solution, depending on the asset. Chainlink Automations or Gelato Functions respectively monitor emitted price request events and trigger price retrieval when requests are initiated.

• At position open, a trader's collateral is deposited into Ostium's trading contract, which stores the collateral of outstanding open trades until further action is taken (liquidation, closure).

Trade Settings

• Side: traders first select the side of their trade – long or short.

• Order Type: the protocol supports three open order types at genesis – market, limit, and stop orders. Traders set limit and stop prices for the latter two trade types.

• Collateral: the minimum amount is as low as 7 USDC on some assets.

• Leverage: traders can select between 1x-200x leverage, depending on the asset. More volatile or lower liquidity assets (e.g., Copper) have lower leverage limits than less volatile and/or highly liquid assets (e.g. GBP/USD).

• Position Size: traders can also determine total exposure by first adjusting position size, denominated in the notional asset, and inferring desired leverage or collateral amount.

• Take Profit & Stop Loss: traders can optionally set and/or adjust TP and SL orders at open. TP orders at 10x (900%) profit are automatically set to reduce tail event risk for LPs. (Please note: maximum and mandatory TPs of 10x is enforced; over time the protocol may increase this threshold or eliminate it entirely should risk management analysis determine this protection no longer be necessary).

Protocol Opening Fee

This fee is a function of three trader-determined variables – asset, leverage and position size – and one protocol condition- skew. Combining these variables aims to price all externalities of a specific trade. Trades increasing skew generate greater delta exposure for the Liquidity Buffer; as a result, skew-increasing trades are charged a higher baseline fee.

The fee charges change according to trade characteristics:

• Maker charge: a trader is charged a “maker” fee if the amount of leverage is below 20x and OI skew reduces with this trade;

• Taker charge: a trader is charged a “taker” fee if the amount of leverage is above 20x or if OI skew increases with this trade;

*For mixed trades (e.g. closing a long OI imbalance, but overshooting and generating a short OI imbalance), maker fees are charged on the portion of the position that is balancing and taker fees on the portion that generates a new directional imbalance.

Thus, we define the Protocol Opening Fee as:

$$fee_{protocolOpen}= makerCharge+takerCharge$$

Ostium doesn't charge a closing fee.

Open Price & Price Impact

Ostium executes trades using the underlying market's native bid and ask prices, ensuring execution reflects real-world conditions without any artificial spread adjustments or scaling. This provides greater transparency and a more accurate representation of true trading costs for users.

For a detailed breakdown of how different order types behave under this model, see: Order Types.

• Bid/Ask Price: instead of using the mid-price to open or close positions, we incorporate real market dynamics where a long position open price is the ask price and closing price is the bid price. See table below:

	Buy (Long)	Sell (Short)
Open Trade	Ask price	Bid Price
Close Trade	Bid price	Ask Price

We dramatically minimize exploit opportunities resulting from underlying market liquidity or increased spreads during market events by using the underlying market dynamics and incorporating resulting liquidity information into the price at which a trader can enter a position.