SIP-5: Universal Markets Listing

Background: the road to permissionless markets

Looking back at the evolution of DeFi: starting in 2019, core protocols like MakerDAO, Uniswap, and Compound gradually matured and laid the infrastructure for decentralized finance. By 2020, the open issuance of spot assets and AMM-based liquidity ignited the first wave of large-scale DeFi growth. Every paradigm shift has been accompanied by a fundamental liberation of asset power.

If we break down today’s crypto financial markets layer by layer:

• Pre-listing / Ultra-Early-Stage Assets. Represented by pump-style launchpads. This is the first generation of open issuance.
• Spot Assets. Represented by Uniswap V2 / V3 and the broader AMM ecosystem. This is the second generation of open issuance.
• Perpetual Futures. The largest derivatives market in crypto today, with the widest imaginative surface area. Yet listing rights and market-making rights still sit firmly with protocol operators. The open-issuance piece of the puzzle is still missing at this layer.
• Options / Prediction / RFQ / Structured Derivatives. Still in early-stage exploration, scattered across isolated experiments, far from converging into a paradigm.

Every leap forward in crypto finance has, at its core, repeated the same sentence:

“Liquidity is everything, and permissionless listing is the spark that ignites it all.”

But when the industry turns its attention to derivatives, the most imaginative frontier in financial markets, an inconvenient fact emerges: the right to list and the right to make markets for derivatives has never been unlocked. This is not because open issuance is technically impossible. It is because the industry has not yet found a mechanism that is truly risk-controlled, sustainable, and incentive-aligned enough to return derivative listing to the market the way spot listing was returned by Uniswap.

When we built StandX, launched the yield-bearing base asset DUSD, and assembled a high-performance Perps engine, we came to terms with a less romantic reality: for an emerging derivatives venue, attempting to launch with 300 to 400 trading pairs on day one and competing head-to-head with incumbents on depth is simply unrealistic.

Real liquidity should not be force-subsidized by the protocol. It should be returned to the market. This is the core logic behind SIP-5: let communities and project teams own their own liquidity, achieving long-term incentive alignment. To prepare for this moment, we laid the infrastructure groundwork: we created DUSD, built DUSD-margined Perps, and, to cold-start liquidity from zero, we invented the tick-level Market Maker Uptime Program. Now it is time to close the loop and transition naturally into SIP-5’s ultimate form.

SIP-5 connects these modules into a coherent, self-circulating market structure:

StandX is not just “another Perps DEX.” The goal is not to compete on feature checklists, but to vertically integrate yield-bearing assets, high-performance trading, on-chain liquidity coordination, and community-driven market creation.

SIP-5 is a critical step in that vision: it evolves StandX from “an exchange that lists pairs” into an execution layer on top of which the community can create, fund, maintain, and extend derivatives markets.

Overview

SIP-5 introduces the Universal Markets framework to StandX, returning, in a permissionless manner, the rights to list, market-make, and capture long-term revenue from perpetual derivatives back to the community.

The heart of SIP-5 is Universal Markets: any asset, by anyone, can be deployed as a permissionless perpetual market on StandX. Major crypto assets, long-tail tokens, pre-TGE tokens, on-chain events, and a broad universe of settleable targets can all be onboarded through a Sponsor and an Oracle Grid, becoming an independent Market.

Within this framework, any user, community, protocol, or project team that meets the staking and risk-control thresholds can, without prior approval from the StandX team, commit qualifying assets, submit a market proposal, configure a liquidity budget, and accept the ongoing maintenance responsibilities to deploy a DUSD-margined Universal Market on StandX. This proposal names this role the Sponsor (Market Initiator / Market Steward), deliberately not “Asset Owner” or “Issuer,” because no one owns the market. The Sponsor’s job is to initiate it, guard it, and continue to push it forward, aligning the long-term incentives of traders, market-makers, the community, and the protocol.

A Universal Market’s initial capital is split into two strictly separated vaults: a Market Shield (the loss-absorbing insurance vault) and a Reward Vault (the incentive budget for MMs and optional trader rebates). The two roles never bleed into each other. Full design in Vault Architecture.

What truly makes Universal Markets self-sustaining is the elegant self-growth loop beneath the surface:

Sponsor injects budget → MMs earn rewards → Two-sided depth forms → Volume picks up
       ↑                                                                   ↓
       └── Stand Mode: fees continuously recycled into market-making ←──── Fees

The full stake injected by the Sponsor flows into that Market’s Reward Vault (the dedicated MM Uptime Pool), which is distributed to real community market-makers based on quantifiable metrics: two-sided quotes, uptime, depth at the top of book, proximity to mid, and more. In return, the Sponsor receives a configurable share of qualifying fees generated by the Market over the long term, with the ratio set by the Sponsor at deployment within a protocol-defined envelope, and conditional on the Market being Live and healthy (sufficient Market Shield reserve, healthy oracle, adequate depth, no anomaly flags). The Sponsor may further enable Stand Mode to continuously recycle that fee share back into the Reward Vault, placing the Market into a self-reinforcing flywheel. Once a Market gets going, it becomes deeper, livelier, and more resilient on its own. The protocol does not need to subsidize; the market feeds itself.

Every Universal Market fully inherits the core risk-control framework of StandX Perps: margin, liquidation, position limits, oracle monitoring, insurance fund, and ADL all carry over. On top of that, the Sponsor commits a Market Shield (the Market’s dedicated insurance vault), sitting in front of ADL as the first-loss buffer.

SIP-5 upgrades “listing” from a one-time admission decision into a continuous market-construction contract: the protocol no longer unilaterally decides which assets to list. Instead, that right is handed to communities willing to share responsibility for liquidity, price quality, risk boundaries, and long-term growth.

Core Mechanism

Universal Markets revolve around three concentric forces (liquidity incentives, fee circulation, and rigorous risk control) composed into a self-growth loop with the skeleton: Sponsor stakes → community market-makes → real volume forms → fees recycle back. The Sponsor directly funds community market-makers and grows the market from nothing; once volume materializes, fees are continuously recycled to market-makers, and optionally to traders, through Stand Mode, putting the Market into a self-feeding flywheel.

The complete mechanism distills into five core pillars, each expanded in detail in the sections that follow:

1. Becoming a Market Sponsor & Dynamic Staking

   • Eligibility to deploy a Market: a user becomes a Market Sponsor by staking DUSD (or the future StandX platform token) to claim a Market Slot.
   • Dynamic stake amount: the staking amount is not a fixed number. It adjusts dynamically with market conditions and governance parameters. The more tokens staked, the larger the liquidity incentive budget the Sponsor commits to the Market, the higher the cost of misbehavior, and the stronger the resulting confidence among traders and market-makers.
   • Phased release: the Sponsor sets a phased release schedule for the initial market-making budget (e.g., 3, 6, or 12 months), aligning incentive disbursement with the long-term build cadence of the Market.

   Note: At the time of writing, the StandX platform token has not yet been issued.

2. Community-Funded Market-Making (Sponsor-Funded × Community-Made)

   • 100% routed to the Reward Vault: the entire token stake committed by the Sponsor as MM budget is injected into that Market’s Reward Vault, which then funds the MM Uptime Program. StandX takes no “listing fee” and no protocol cut from this budget.
   • Genuine liquidity hiring: the budget is distributed monthly to qualifying community MMs based on objective performance (uptime, depth, two-sided quote quality, etc.). Community capital, hiring community MMs, building community markets.
   • Loss isolation: the Reward Vault is strictly separated from the Market Shield. Community MM rewards already earned can never be retroactively clawed back to plug a liquidation shortfall.

3. Revenue Distribution & Stand Mode (Self-Driven Flywheel)

   • Fee share: the Market Sponsor receives a Sponsor-configurable share of the trading fees generated by that Universal Market. The exact ratio is set by the Sponsor at deployment within the protocol-defined envelope, and may be adjusted later through governance-bounded updates. SIP-5 deliberately does not hard-code a fixed split.
   • Health-conditional: fee share accrues only while the Market is operating healthily. If the Market is flagged as unhealthy (insufficient Market Shield reserve, oracle anomaly, thin depth, anomalous trading), fee share is paused and held in escrow pending remediation; once the Market is being wound down, no new fee share accrues.
   • Stand Mode: the Sponsor may top up the Reward Vault at any time. More importantly, the Sponsor can enable Stand Mode, which automatically and continuously recycles the Sponsor’s fee share back into the Reward Vault.
   • Flywheel effect: Volume → Fee share → Re-injected into Reward Vault → Deeper liquidity → More volume. Enabling Stand Mode is a long-term commitment, a public declaration that the Sponsor is here to grow the pie, not to drain liquidity for short-term extraction.
   • Trader incentive (optional): the Sponsor may optionally allocate a portion of the budget pool, or of their fee share, as use-based rewards to real Market Traders, distributed via account-bound participation history, never as tradable LP shares. See Participation Receipts.

4. Market Type & Customizable Settlement Different asset categories can adopt different Universal Markets rule sets:

   • Perpetuals (Perps): the standard continuous market with no fixed expiry.
   • Prediction Market: the Sponsor may configure a forced delist / settlement trigger (e.g., the conclusion of a sports event, an on-chain event firing); upon trigger, the system uniformly settles all participants under the predefined rules.

5. Market Shield & ADL Inheritance Every Universal Market fully inherits the StandX Perps risk-control framework. The Sponsor commits a Market Shield (the Market’s dedicated insurance vault), sitting in front of ADL: when the Market hits extreme conditions and the liquidation engine cannot find a counterparty at acceptable prices, the protocol draws from the Market Shield first; ADL fires only when the Shield is depleted. The Market Shield balance is fully transparent on-chain, acting as a credibility signal to traders, and the required reserve floor is one of the inputs that drives the Market’s lifecycle state.

On top of these five pillars, a Sponsor may further customize a Market (max leverage, market type (perps / prediction / pre-market), delist rules, trader reward ratios, and more) within the bounds set by SIP-5. The full specification of configurable parameters is given in subsequent sections.

Vault Architecture: Market Shield and Reward Vault

A common failure mode in derivatives launchpad designs is conflating “the money that absorbs losses” with “the money that pays out rewards.” SIP-5 enforces a strict separation between these two roles by splitting a Universal Market’s capital into two independent vaults: the Market Shield (the Market’s insurance vault) and the Reward Vault (the Market’s incentive budget).

Market Shield

Market Shield is the Sponsor-funded first-loss reserve attached to a Universal Market. In architectural terms, it plays the role of the Market’s insurance vault: the loss-absorbing capital, kept strictly separate from any reward budget.

• Purpose: absorbs first-loss for the Market. Sits in front of ADL.
• Funding source: Sponsor’s own reserve, posted at Market creation; Sponsor may top up at any time.
• Behavior: drawn down when liquidations cannot be cleared at acceptable prices on the order book; only when the Shield is depleted does ADL trigger.
• Constraint: capital here is never used to pay MM, trader, or contributor rewards. It is loss-bearing capital, period.
• Transparency: balance fully visible on-chain; functions as a credibility signal to traders.
• Reserve floor: a required_reserve_floor is set per Market Type. If the Shield balance dips below this floor, the Sponsor’s fee share is paused until the Shield is topped up.

Reward Vault

• Purpose: pays out incentives to MMs, traders, and other contributors.
• Funding source: (a) Sponsor’s initial market-making budget at deployment, (b) Sponsor top-ups, (c) Stand Mode fee recycling, (d) Seeding Pool injections.
• Behavior: distributed monthly to qualifying MMs by maker_score; optionally rebated to real traders by configured rules.
• Constraint: capital here is never used to absorb liquidation shortfalls. A bad market does not eat into MM rewards already earned.
• In SIP-5 terms: this is what the original “MM Uptime Pool” maps onto, scoped explicitly.

Why the Split Matters

The Shield ↔ Reward separation is a technical, accounting, and compliance boundary at the same time:

• Technical: rewards already earned by community MMs cannot be retroactively clawed back to plug a Market Shield hole.
• Accounting: Sponsor reserve and community reward budget appear as two distinct on-chain balances, with separate withdrawal rules, separate state-machine triggers, and separate audit trails.
• Compliance: it lets us cleanly say “the Market Shield is the Sponsor’s own first-loss capital” without entangling community-bound payouts.

Sponsor

Rights & Responsibilities

A Sponsor is not the owner of a Market, but its initiator, maintainer, and steward.

Every Universal Market must have exactly one primary Sponsor (a co-sponsor mechanism may be introduced via a future child SIP). The Sponsor’s core responsibilities are to safeguard the Market’s long-term health, including:

• Providing qualifying staking assets and committing to a distribution schedule;
• Configuring the Market’s key parameters (max leverage, oracle source, market type, funding model, etc.);
• Monitoring the Market’s oracle, liquidity, and risk posture throughout its lifecycle, and responding actively when needed;
• Funding the Market’s Reward Vault (which powers the MM Uptime Program) to incentivize real market-makers;
• Posting and maintaining the Market’s Market Shield as a first-loss buffer above the required reserve floor;
• Optionally configuring Trader Incentives, returning a portion of a dedicated token pool based on real trading behavior (always use-based, never as tradable shares).

In return, the Sponsor enjoys:

• A Sponsor-configurable share of qualifying trading fees for the Market, set by the Sponsor at deployment within the protocol-defined envelope, conditional on Market health;
• Configuration rights over Market parameters, within the protocol’s risk-control envelope;
• The right to enable or disable Stand Mode;
• The Market itself, as a long-term on-chain footprint and reputational asset belonging to the Sponsor.

Important: the Sponsor’s fee share is not unconditional. A Sponsor accrues fee share only while the Market is Live and healthy. If Market Shield reserve drops, oracle confidence drops, depth thins out, OI exceeds caps, or anomaly metrics rise, the Market is auto-demoted to Watchlist and fee share is paused (held in escrow) until the Sponsor remediates. Sponsors are paid for healthy Markets, not for the act of having opened one.

Staking Tokens

At the current stage, the qualifying staking assets are:

• DUSD: StandX’s native yield-bearing stablecoin;
• Platform Token: At the time of writing, the StandX platform token has not yet been issued. Once launched, it will automatically become one of the qualifying staking assets.

StandX reserves the right to expand the list of qualifying staking assets through future child SIPs, to match the ecosystem’s evolution.

The staking amount is not a fixed number, but a dynamic range jointly governed by parameters and market conditions. The higher the stake:

• The larger the liquidity incentive, the stronger the depth it can attract;
• The higher the Sponsor’s cost of misbehavior, the more trustworthy the Market is to traders.

Market Type

Different Market Types correspond to different parameter envelopes, lifecycles, and risk-control regimes.

• Perpetual Market: Classic perpetual contract with no fixed expiry. Suitable for the vast majority of standard crypto assets.
• Pre-market: For price discovery prior to TGE or listing. Typically paired with Blind Grid, with significantly tightened risk parameters (lower max leverage, tighter OI limits, denser market surveillance).
• Prediction Market: The Sponsor must specify an explicit delist time and settlement rules.
  • Structurally, this model is equivalent to a dated futures market;
  • It is broadly applicable to event-based predictions (e.g., settling both sides at the end of a sports match);
  • In special cases, the delist time need not be predetermined. The Sponsor may, within the compliance and governance framework, force-trigger a unified settlement of all participants.

Future child SIPs may extend additional Market Types (e.g., funding-rate-only swaps, index baskets, structured payoffs).

Stand Mode

Stand Mode is an on-chain public declaration of a Sponsor’s long-term commitment to a Market.

Once enabled, the qualifying fee share earned by the Sponsor on that Market is automatically and continuously routed back into the Market’s MM Uptime Pool:

Volume → Fees → MM Rewards → Deeper Liquidity → More Volume

The essence of Stand Mode is this: the Sponsor voluntarily gives up short-term fee income, reinvesting it into the long-term liquidity build-out of the Market. It is a public, verifiable, and observable long-term signal: that the Sponsor places market depth growth above personal short-term returns.

Stand Mode is bidirectional: a Sponsor can disable it at any time, but every toggle is permanently recorded on-chain, accumulating into the Sponsor’s publicly visible reputation track.

Market Maker

Sponsor Directly Hires Community Market-Makers

SIP-5 establishes a relationship between the Sponsor and Market Makers that is far more direct, and far more long-term-aligned, than any traditional listing-fee model:

The full stake injected by the Sponsor flows into that Market’s dedicated MM Uptime Pool, used entirely to reward community market-makers on that Market. The StandX protocol does not extract any listing fee from these funds.

This means:

• The Sponsor is using its own resources to directly hire community market-makers to provide genuine depth for the Market;
• All incentive resources flow entirely back to the community; the first beneficiaries, once the Market takes off, are the very participants who supplied its liquidity;
• There is therefore no zero-sum game between the protocol and the Sponsor: the more the Sponsor stakes, the deeper the book, the stronger the Market, the more the protocol naturally benefits over the long term from the Market’s trading fees. This is a structurally long-termist design that proactively cedes value to liquidity providers at the protocol layer.

Distribution Mechanics

• Distribution metrics: tick-level market-making performance, including two-sided quote quality, uptime, depth at the top of book, proximity to mid-price, cancel ratio, and other quantifiable indicators;
• Distribution cadence: monthly settlement. At Market creation, the Sponsor specifies the total number of distribution months (3 / 6 / 12), matching the long-term build cadence;
• Top-up mechanism: the Sponsor may add additional tokens to the MM Uptime Pool at any time;
• Stand Mode boost: once Stand Mode is enabled, the Sponsor’s qualifying fee share is automatically routed into the pool, forming a cross-cycle self-circulating incentive.

Seeding Pool: Cross-Market Liquidity Bootstrap

To break the cold-start deadlock of new Markets (“no traders means no MMs, no MMs means no traders”), StandX maintains a Seeding Pool at the protocol layer:

• A small, governance-determined fraction (reference range 3-5%) of the platform’s total fees is routed into this Pool;
• When a new Market’s MM Uptime Budget is approaching depletion and its monthly volume is still below a threshold, the protocol automatically draws from the Seeding Pool to provide a baseline incentive to high-maker_score market-makers on that Market;
• The Seeding Pool is not a traditional listing subsidy. It is a protocol-level liquidity bootstrap by which mature Markets nourish new ones, ensuring that every high-quality new Market on StandX has a baseline of liquidity, even when short-term budgets run dry.

This mechanism is perfectly aligned with SIP-5’s “self-evolving on-chain financial city” narrative: mature Markets cede a small patch of soil to seedling Markets, and the new Markets in turn enrich the ecosystem with a wider variety of asset forms.

Market Trader

Participation Receipts (Early Supporter Identity)

Early support of a Universal Market accrues to the supporter as an account-bound Participation Receipt, never as a tradable share or LP token.

• Issued for: real participation, such as completing early trading tasks, providing early MM uptime, following a Market through bootstrapping, or contributing to oracle bootstrap.
• Records: the participation phase and contribution type for that account on that Market.
• Unlocks: badges, priority access to subsequent Markets, trader credit boosts, and per-Market trader rebates.
• Properties: non-transferable, non-tradable, non-collateralizable. Receipts do not entitle the holder to a pro-rata share of trading fees, nor to a claim on the Market Shield or Reward Vault.
• Failure-mode protection: because Receipts are not LP shares, a Market entering Sunset or Delisted does not impose a loss on Receipt holders. Market Shield drawdowns affect only the Sponsor’s reserve, never holders of Receipts.

This is a deliberate design choice. It preserves the upside feeling of “I was here early on this Market” without packaging that participation as a security or a fund-share product.

Trader Incentives

By default, the fee-share structure of a Universal Market is split between Protocol and Sponsor. To break the cold-start cycle for new Markets and to provide positive incentives to real traders, a Sponsor may optionally cede part of the incentive pool to the trader side.

Trader incentives can be sourced from two channels:

1. A dedicated token pool configured by the Sponsor: explicitly carved out at Market creation, functioning as the Sponsor’s budget for market promotion and trader acquisition;
2. Stand Mode fee share: once Stand Mode is enabled, the Sponsor may route a configured portion of its fee share to trader rebates / credit.

The Sponsor configures the specific rules for Trader incentives, within the protocol’s allowed boundaries:

• Whether enabled;
• The metric the incentive is tied to (volume, PnL-neutral volume, maker volume, taker volume, etc.);
• Payout cadence (real-time rebate / periodic distribution);
• Whether anti-Sybil checks are enabled.

Trader incentives are an optional advanced configuration, disabled by default. The guiding principle is always: reward real trading behavior, never devolve into wash-volume farming.

Penalty Mechanism

A Sponsor enjoys governance rights over the Market, but those rights must be paired with responsibility. SIP-5 specifies the automated and governance-triggered actions that apply when a Market deviates from its expected operating envelope.

Automatically Triggered Clauses

• Oracle quality below threshold: under Open Grid, if the Sponsor’s oracle source persistently deviates from reference benchmarks, fails to meet update frequency requirements, or is suspected of manipulation, the protocol has the right to forcibly suspend the feed and freeze new position opening on that Market until the feed is fixed or replaced;
• Reward Vault insufficient: if the Sponsor, for any reason, allows the Reward Vault balance to fall below the minimum threshold for that Market Type without replenishment within the governance window, the Market enters ReduceOnly and only position closure is allowed;
• Market Shield anomaly: if a Sponsor’s Market Shield exhibits clearly anomalous behavior (e.g., abrupt large withdrawals, interactions with high-risk addresses), withdrawals from it may be frozen at the protocol level and the Market moved to Watchlist;
• Parameter abuse: if a Sponsor sets clearly anomalous configurations on leverage, OI caps, or funding models for self-benefit, the protocol may forcibly revert parameters to defaults.

Governance-Triggered Clauses

• Sponsor-initiated delist: must follow the delist process applicable to the Market Type (e.g., the settlement flow of a Prediction Market) and must not harm the legitimate interests of existing traders;
• Protocol-level delist: under severe violations, severe risk events, or compliance requirements, the protocol reserves the right to shut down a Universal Market through an emergency SIP process.

Reputation & Future Extensions

All historical Sponsor behavior on StandX accrues as on-chain footprint. Future child SIPs may build on this reputation system to introduce reputation-weighted fees, stake thresholds, and governance weights, granting structurally favorable treatment to long-term, prudent, and responsible Sponsors.

Oracle Grid

Every Universal Market must declare an oracle source falling under one of the three Grid Tiers below.

Blind Grid: No External Index

No external price source. Typical use cases:

• Early price discovery for pre-TGE / pre-market assets;
• On-chain event-driven Prediction Markets;
• Early-stage assets without any public authoritative quote.

Without an external anchor, this Tier defaults to more conservative risk parameters: lower max leverage, tighter OI caps, more proactive funding adjustment, and denser market surveillance.

Linked Grid: Protocol-Curated Feeds

The Sponsor selects directly from an oracle feed list audited and maintained by StandX (including but not limited to Pyth, Chainlink, and other onboarded providers). This is the default mode for the vast majority of standard crypto-asset Universal Markets: minimum deployment friction for Sponsors, maximum data trust for traders.

Open Grid: Sponsor-Provided Oracle

The Sponsor provides their own oracle source. In this mode, StandX acts as the supervisor:

• Continuously monitoring update frequency, deviation, and consistency against multi-source reference prices;
• Reserving the right to temporarily suspend or permanently strip any feed that significantly degrades or shows signs of manipulation;
• The Market resumes normal operation only after the Sponsor repairs or replaces the feed.

The Oracle Grid framework is an open architecture designed for continuous evolution. Future child SIPs may introduce additional Tiers or finer-grained sub-classifications, such as:

• Multi-source composite pricing;
• DAO-curated oracles;
• High-frequency, low-latency feeds;
• Cross-chain / cross-domain oracle bridging.

Market Shield: Liquidation & ADL

Market Shield is the Market’s dedicated insurance vault: the Sponsor-funded first-loss buffer of a Universal Market. Its full architecture, funding sources, and isolation guarantees are defined in Vault Architecture. This section specifies its behavior under liquidation and ADL.

Liquidation Order of Operations

When a Market encounters extreme conditions and the liquidation engine cannot find a counterparty at acceptable prices on the order book:

1. The protocol draws from the Market’s Market Shield to take over the position;
2. Only when the Shield is depleted does ADL (Auto-Deleveraging) trigger, following the standard StandX Perps ADL flow.

Risk-Inheritance Principle

The Market Shield is not a substitute for, nor a bypass of, StandX Perps’ risk-control framework. All margin requirements, liquidation thresholds, position limits, funding models, and the protocol-level insurance fund are inherited fully from the StandX perps engine. Universal Markets create no exceptions along these axes.

The Market Shield means only this: the Sponsor voluntarily uses their own capital to absorb first-loss for the Market’s extreme tail risk, ahead of and in protection of other traders.

Transparency and Reserve Floor

Market Shield balances are fully visible on-chain, functioning as a verifiable credibility signal from the Universal Market to its traders. Whether a Sponsor genuinely believes in the long-term success of their Market becomes immediately apparent from the trajectory of the Shield’s balance.

Each Market Type defines a required_reserve_floor. If the Market Shield balance falls below this floor, the Sponsor’s fee share is automatically paused until the Shield is replenished.

User Stories

This section captures the lifecycle of a Universal Market through the lens of every key persona. Each story is anchored against the mechanics defined above (Vault Architecture, Participation Receipts, Stand Mode, etc.).

Story 1: A Professional Sponsor Launches a New Market

As a professional Sponsor, I observe clear and growing trading demand for an asset or narrative that is not yet served by any major perp DEX. I want to propose a Market on StandX, lock in a Sponsor Reserve, configure an initial Reward Budget, and have that Market be discoverable, launchable, and tradable quickly.

Flow:

1. The Sponsor submits a Universal Market application: market thesis, oracle plan, initial parameters, MM arrangements, risk notes.
2. The protocol computes the required Market Shield reserve based on Market Type, oracle quality, expected volatility, and initial OI cap.
3. The Sponsor posts Bond / Reserve into the Market Shield, and seeds the Reward Vault with initial MM and Trader incentive budget.
4. The Market opens for bootstrapping. Users can watch, subscribe to alerts, and inspect the Sponsor’s prior track record.
5. Once trading goes live, the Sponsor accrues fee share while the Market is healthy. If reserve runs low or health degrades, fee share auto-pauses and remediation is required.

Success outcome: The Sponsor is not “paying to list.” The Sponsor is building an on-chain market-incubation track record. Each successful Market raises the Sponsor’s reputation and lowers the friction of launching the next.

Story 2: A Market-Maker Picks Where to Commit Inventory

As an MM, I do not want to spray quotes across every new Market blindly. I want to see, per Market: Reward Vault balance, reward formula, depth target, oracle risk, and the Sponsor’s track record, so I can decide where my inventory and tech are best deployed.

Flow:

1. The MM browses upcoming and newly live Markets.
2. Per Market, the MM inspects: reward budget, maker_score formula, target spread / depth, current MM competition, historical reward distribution.
3. The MM connects and begins two-sided quoting.
4. The protocol scores via Two-Sided Depth, Proximity, Persistence, Fill Quality, Inventory Risk, Market Health Multiplier, etc.
5. The Reward Vault distributes to qualifying MMs periodically, while excluding quote stuffing, short-cycle cancels, wash trades, and related-account behavior.

Success outcome: MMs allocate inventory toward markets with clear risk-adjusted return, instead of relying on side-channel deals or opaque platform subsidies. MM contribution accumulates as visible reputation.

Story 3: A Trader Joins Early Price Discovery

As a Trader, I am happy to take part in early Markets, but I want to know whether the Market is safe, whether liquidity is sufficient, what the trading incentives are, and how I am protected if something goes wrong.

Flow:

1. The Trader sees a new Market in Bootstrapping or recently Live.
2. The Market page surfaces: market health, oracle source, OI cap, max leverage, Market Shield balance, Reward Vault balance, current state, risk notes.
3. While trading, the Trader earns use-based fee rebate or credit boost, never as a passive holder of a tradable share.
4. If the Market enters Watchlist or ReduceOnly, the Trader sees the reason, the active limits, and the exit window.
5. The Trader’s actual trading contribution is logged as account-bound participation history, usable for future Market priority access or credit upgrades.

Success outcome: The Trader’s reward is “I get better usage rights because of real trading contribution,” not “I bought a share that may go up.”

Story 4: An Early Supporter Gets Identity, Not First-Loss

As an early supporter, I want to express belief in a new Market and receive identity, access rights, and use-based privileges if it succeeds, but I do not want to unknowingly take liquidation losses or insurance-pool risk.

Flow:

1. The user follows the Market, joins early activities, or completes early trading tasks during bootstrapping.
2. The protocol issues an account-bound Participation Receipt logging the user’s participation phase and contribution type.
3. The Receipt unlocks badges, priority access, trader credit boosts, or per-Market trader rebates.
4. The Receipt is non-transferable, non-tradable, non-collateralizable, and does not pay pro-rata fees.
5. After Market graduation, real early contributors gain a priority access window for the next Universal Market they wish to back.

Success outcome: Users are recognized as “early co-builders,” not packaged as investors or LPs. Market Shield drawdowns affect only the Sponsor’s reserve, never ordinary participants.

Story 5: Platform Ops Drives a Repeatable Growth Loop

As platform ops, I want each new Market launch to be part of a repeatable growth flow (pre-heat, launch, contribution, graduation, retro, redirect to the next Market), not a one-off airdrop event.

Flow:

1. Ops curates the cadence of upcoming Markets and surfaces the Sponsor’s prior track record.
2. Market health, contributor badges, and Sponsor reputation become recurring content surfaces.
3. Real early contributors of a successful Market get priority access to the next one, forming an alumni network.
4. The Sponsor reputation leaderboard turns top initiators into recurring ecosystem actors, not one-shot customers.
5. Failures leave a transparent retro: was reserve sufficient, was oracle stable, did MMs honor commitments, were traders genuine.

Success outcome: Growth flips from “platform subsidizes user” to “successful Markets generate Sponsor reputation, user identity, MM income, and the cold-start traffic for the next Market.”

Story 6: A Failing Market Gets Closed Down Cleanly

As a Market participant, I accept that not every new Market will succeed, but I expect failing Markets to be closed in a transparent, predictable, low-harm manner.

Flow:

1. A Market with persistently low health or a non-performing Sponsor is flagged and trading restrictions tighten progressively.
2. The Market page surfaces explicit reasons: reserve insufficient, oracle anomalous, depth insufficient, volume insufficient, anomalous trading too high.
3. If unrepaired, the Market is moved to close-only: no new positions, only closes.
4. The Reward Vault stops new distributions; only previously-earned, anti-Sybil-cleared rewards settle.
5. The Market Shield absorbs first-loss per the rules; remaining Sponsor Reserve is handled per lockup terms.
6. The Market is wound down with a permanent on-chain retro tied to the Sponsor’s reputation.

Success outcome: Failure is not a black-box delisting and is not pushed onto ordinary users. A failed Market becomes a training sample for Sponsor reputation and risk parameters.

Terminologies

Positioning & Vision

StandX Perps has never been “just another derivatives DEX.”

Step back from today’s crypto financial landscape, and an awkward but undeniable reality comes into focus: capital and functionality are profoundly fragmented.

If you want a stablecoin to keep earning yield, your funds end up custodied with a lending protocol or a centralized platform, exposed to additional protocol and counterparty risk. If you want high-performance on-chain derivatives, you must bridge across multiple Layer 2s, accepting fragmented liquidity. If you want to execute a block trade without moving the market, you often have no choice but to fall back to traditional institutional channels, surrendering the transparency and self-custody of on-chain markets.

These are real, massive, and persistent needs. They are scattered not because they are unimportant, but because the industry has not yet built a native fabric that stitches them back together.

The question StandX truly seeks to answer is something more ambitious, and more audacious:

“How do we ensure that capital on-chain never sleeps?”

To let yield generation, trading, market-making, block liquidity, and community market-creation, capabilities once scattered across different protocols, different chains, and different asset forms, converge seamlessly, reinforce each other, and grow together for the first time within a single native fabric.

This is the full shape of StandX: three vertically integrated layers, all anchored to DUSD:

1. Asset Layer. Multichain DUSD: a stable, secure, automatically yield-bearing base asset that requires no active staking.
2. Execution Layer. A Perps engine with DUSD as the unified pricing and margin asset: traders earn interest the moment they open a position, and market-makers earn tick-level measurable incentives through the MM Uptime Program.
3. On-Chain Layer. Anchored by Block Trade (SIP-1), extending outward to P2P and OTC, and onward through Options (SIP-4) and RFQ and other more complex derivatives forms, enabling large-capital flows to settle on-chain without disturbing the order book.

And SIP-5 is the ignition point of this entire stack.

It hands the rights of market creation, market-making, and long-term governance directly back to the community. Anyone can initiate, cultivate, and co-build their own derivatives market on StandX. Universal Markets are also natively compatible with assets and liquidity from traditional markets: mature listed assets, OTC desk quotations, and the capabilities of professional market-makers can all be onboarded into a Market through the Sponsor and Oracle Grid framework, amplifying in concert with on-chain native capital.

Looking back at DeFi’s paradigm shifts:

Pump-style launchpads returned ultra-early-stage asset issuance to the people. Uniswap returned spot issuance and market-making to the market. StandX returns perps issuance, market-making, and long-term market-building to the community.

We believe: after the rise of pump-style launchpads and Uniswap, Universal Markets is the third generation of open issuance, and the most critical missing piece in the derivatives landscape of the past several years.

When yield-bearing assets, high-performance trading, block liquidity, and community market-making are all fully composed on StandX, it ceases to be merely an exchange. It becomes a continuously self-evolving, never-sleeping on-chain financial city.

On StandX:

• Your margin earns yield;
• Your liquidity earns tokens;
• Your assets can, at any moment, become the market-making fuel for the next 100x market;
• The markets you create become an on-chain reputation of your long-term contribution to on-chain finance, permanently recorded on the blockchain.

Welcome to a new era of capital that never sleeps.