Surge Features

As we approach the release of the testnet version of Surge and onward to the first release of Surge mainnet, we’d like to highlight some of the key features and what will evolve over the coming months.

Surge is the first perpetual DEX on Radix, and will allow users to speculate on a wide variety of crypto assets with high leverage using cross margin collateral. Here are some of the features we’d like to share that are at the core of Surge and what it aims to achieve:

Simplicity for the User

User comfort and familiarity when trading are just as important to seasoned professionals as novice traders and is something that we take very seriously. From opening an account to managing collateral or executing trades, Surge seeks to reduce friction at every step along our users’ journey, allowing for a seamless and smooth experience.

USD at the Core

Everything on Surge is based in USD terms. Every pair that can be traded is denominated in USD. All accounts are measured, and orders settled in USD and liquidity providers can only add USD to the central pool.

One Pool to Rule Them All

A single USD pool is central to Surge. This pool earns fees from the opening and closing of trades, and owns the opposite position of every user account’s positions. Like user accounts, the pool has limits for total open interest and risk that can be run. If a trade would push the pool beyond these limits, it will be rejected by the protocol. If the risk for the USD pool grows too large due to price changes, an Auto-Deleverage mechanism kicks in which may force close positions to reduce risk.

Introducing Surge Trading Accounts — Open in one click

These trading account components can hold multiple collateral tokens, open positions, limit orders and unfilled waiting requests. Opening and maintaining positions requires sufficient (cross) margin in the account (component) otherwise the account is at risk of being liquidated as normal.
These innovative accounts are inherently linked with at least one ‘thing’ (like a Radix wallet) that has full authoritative control. Additional ‘things’ (for example an NFT, another account etc) can be added on demand with varying levels of trading access. This is extremely powerful and we’ll come back to describe this closer to mainnet launch.

Supported Tokens

• Liquidity providers to the central pool will only be able to supply USDC.
• Oracle prices, and token pairs denominated in USD are represented by actual USD as these feeds are predominantly sourced from centralised exchanges.
• For traders’ collateral, in addition to USDC, Surge will support other USD based tokens like USDT, as well as non-USD based tokens like xwBTC, xwETH, and XRD, with more tokens potentially being added in the future.
• The tradable pairs on Surge will typically be classic crypto assets with deep liquidity on major centralised exchanges. Examples include: BTC, ETH, SOL, XRD, BNB, DOGE, SUI, MATIC, LTC, etc. Initially, Surge mainnet will start with a few pairs, with more added over time.

Please note that Surge will not support the trading of any USD based crypto denominated in USD, such as: USDC/USD, USDT/USD, DAI/USD, FRAX/USD etc due to tail risk that leverage trading brings.
Also please note that Surge will not initially support any Radix native tokens, apart from XRD/USD for trading, since they are not supported by the oracle and also lack deep liquidity.

Trade Types

The core Surge exchange trade logic component supports multiple trade types including: market, limit, and stop limit orders, with add-ons such as reduce only, take profit, stop loss and more. The exchange trade logic component is also fully upgradeable and built with flexibility in mind, enabling further trade types and features to be added in the future.

Trade Sizes and Leverage

At the start of Surge mainnet, users will be able to trade with up to 20x leverage. After this soft start, and once the amount in the pool and risk level allows, the maximum leverage will be slowly increased up to an anticipated 100x for most pairs. This means that with 1,000 USD in your Surge trading account, at 100x leverage, you would be able to take a 100,000 USD position. You as a user will be able to define the max leverage you wish to use when you place your trades.

Trading Fees

Opening and closing any position incurs fees which are credited to the central USD pool. Fees are dynamic but relatively simple to understand.

To open (or close) a trade, the trader has to pay an upfront fixed fee and is also subject to an impact fee (which may be positive or negative). If a trade helps reduce the pool’s overall position, the trader will get a discount (negative impact fee) otherwise the impact fee will be a positive additional fee on top of the upfront fixed fee.

Funding — The Rabbit Hole from Alice in Wonderland

The short above ground answer is:

1. Traders who hold positions that (currently and historically) increase the overall Surge exchange risk (in a particular pair) will pay by the time utilised.
2. Traders who hold positions that (currently and historically) reduce the overall Surge exchange risk (in a particular pair) could get paid (if there are opposite larger positions paying) by the time utilised.

The ‘funding rabbit hole’ answer is deep and complex, though a core principle to take away now is that the funding rate is designed to grow until the longs match the shorts, stopping the growth in the funding. Even if the open long vs short open interests are equal and opposite, this doesn’t mean that the funding for the longs and shorts also have to be equal. Further details on funding will be released closer to mainnet release. Surge has potentially the most reactive and complex funding model developed for any perpetual Dex in crypto to date.

Keeper Network — Zero Authority, 100% Necessary

At the heart of all decentralised perpetual exchanges is a keeper network that oversees the actions and requests of the users while ensuring the smooth functioning of the exchange.

Example: A user submits a request to open a long 1 BTC vs USD position.
When the next oracle price comes in for BTC/USD, the keeper forwards this request with the appropriate oracle-signed data to the exchange component which verifies, and if limits allow, executes the action.

Keepers do a lot for Surge users: monitoring complex risks, highlighting requests that can be actioned, monitoring limit orders, updating the exchange prices and a lot more. Anyone technically could run a keeper as keepers don’t have any special authority to do trades or make changes, but they work to highlight to the Surge exchange component what actions need to be taken.

Oracle — The Proof of the Price

The Oracle collects and provides accurate price data for the tokens. This data is crucial for the exchange to function correctly, as all trades and actions are based on these prices.

The Oracle supplies not just the price data but also a proof of the price, including a digital signature and a timestamp to verify the authenticity and timeliness of the data. Over the past months, Surge has tested multiple vendors and decided to use Pyth oracle prices. They were chosen for their wide range of supported tokens, excellent uptime, low latency, and robust historical APIs.

We previously announced we were utilising Supra Oracles, but after thorough evaluation and testing we have opted for Pyth due to their experience and market offering. Surge will continue to evaluate its Oracle service and may switch to an alternative (such as Supra), if a superior service is identified. Surge is designed to allow for the price oracle to be upgraded in the future or for new price sources to be added.

Referrals — Planting Golden Seeds

Sharing recommendations with friends and colleagues is a natural thing we do everyday. Surge has an entirely on-ledger referral system designed to give both parties benefits, and over time, encourage a wider network of Surge users.

As mainnet launches, we aim to reward Insurgents with a referral NFT that allows them to generate referral codes which they can share with their friends, family etc. The higher the Insurgents Rank the more powerful the referral NFT we will issue. These codes are used at account creation and are tied to the NFT that generated them. Each code has a limited number of uses and has collateral tokens associated with it to be added to the newly created account ready for instant trading. Finally, each referral NFT confers a referral fee that is awarded to the owner of the NFT, in addition to a fee rebate that acts as a discount for the referred user.

SRG Token Features

The SRG token is integral to the governance of the Surge platform. Token holders will have the power to influence key decisions, including protocol upgrades, fee structures, burning rates and other critical aspects of the ecosystem.

A proportion of all opening and closing trade fees will be directed to the SRG treasury component. Depending on the governance burn vs yield ratio the USD fees accumulated could either be used to reduce the SRG supply or allow SRG stakers to collect the fees being accumulated.

Glossary

Leverage — refers to the practice of using borrowed funds to amplify the potential returns of a trade. By using leverage, traders can control larger positions with a smaller amount of capital. For instance, with 10x leverage, a trader can open a position worth 10 BTC with only 1 BTC of their own funds. This means that any profits or losses from the trade are magnified tenfold. However, this also increases the risk, as adverse price movements can lead to significant losses, potentially exceeding the initial investment.

Cross Margin Collateral — Collateral is any asset that users deposit to back their leveraged positions. Cross Margin Collateral allows traders to use the same accounts collateral to support multiple positions, rather than requiring separate collateral for each position. This can provide greater flexibility and efficiency in managing margin requirements across different trades without the need to open separate accounts.

Auto-Deleverage Mechanism — This is a fail-safe mechanism that automatically maintains the stability and solvency of the platform. If market conditions cause the risk of the central pool to exceed a predefined threshold, the system may, in rare circumstances, force-close risk-reducing profitable positions to mitigate potential losses and protect the central pool.

Liquidation — Liquidation occurs when a trader’s position is forcefully closed by the DEX due to the inability to meet the required margin. This typically happens when the market moves against the trader’s position, and the collateral is no longer sufficient to cover the losses. Liquidation can result in the loss of the entire collateral used for the position.

Market Order — An order to buy or sell immediately at the oracle price on the exchange.

Limit Order — An order to buy or sell at a specified price away from the current market oracle price.

Stop Limit Order — Similar to a Limit Order, an order to buy or sell at a specified price away from the current market oracle price. However, unlike normal Limit Order which trigger from the price moving in the opposite direction of the trade, a Stop Limit Order triggers from the price moving in the same direction as the trade. This is also commonly known as a Take Profit or Stop Loss when used to close a position.

Funding Rate — Funding rates are used to maintain balance between long and short open interest. A positive rate means the traders pay the pool. A negative rate means the pool pays the traders. Surge keeps separate rates for long and short positions.

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