🏪Market

Introduction

On Joint protocol, a market is a virtual place where users meet to exchange one asset for another. A market is the centre point of all trading activities on the Joint Protocol.

The Joint Protocol market allows users to add liquidity. The liquidity is denominated in the base asset of the market.

The users who add liquidity to a market are known as Liquidity Providers.

Market Pair

A market comprises two assets — one is known as the base asset, while the other is called the quote asset.

The base token is the liquidity token priced in the quote asset. For example, in an ETH/USDT market, the base token is ETH, while the quote asset is USDT. So, users who want to buy ETH must pay USDT to get it.

Market Type

There are two types of markets.

Instant

This is a market involving only on-chain assets. In an instant market, the base and quote assets exist on-chain as either ERC-20 tokens (ex. WETH) or an NFT. Instant markets are fast and require no coordination or communication with a counterpart.

Interactive

Interactive markets are a type of market where either the base or quote asset or both exists off-chain. Examples of off-chain assets are fiat, gift cards, or a real-world asset. Unlike an instant market, an interactive market requires coordination and communication with a counterpart to track, advance and complete a trade.

Market Creation

As a permissionless system, anyone can create a market for free. It will only cost a transaction fee paid to the blockchain miners to execute the contract call. Once the market has been created, only the creator can update the properties of the market.

Liquidity

Liquidity is the base asset added to a market for users to swap. When there is sufficient liquidity, users can swap an amount at a price specified by the liquidity provider. A user who adds liquidity to a market is known as a Liquidity Provider.

Market Access Level

There are two access levels of a market:

• Open Access: An open market allows anyone to add and swap liquidity. There are no limits or restrictions in this type of market. Anyone can interact with the market.

• Permissioned Access: A permissioned market allows only users who have been added to an allowlist. It is designed to replace private or trusted peer-to-peer marketplaces that commonly exist on messaging applications with a more trust-minimised experience.

Market Mediation

Mediators are integral to the success of a decentralised peer-to-peer marketplace where one asset cannot be tracked because it exists off-chain. The Joint Protocol includes a mediation protocol that allows individuals and organisations worldwide to offer mediation services for an opportunity to receive protocol incentives.

Mediation Pool

A mediation pool is a component of the Joint protocol that involves pooled mediators designated to mediate for markets of a specific configuration.

Mediators can be pooled to include only mediators that can mediate in markets involving USD, gift cards, collectables, comics, etc.

During market creation, the creator must specify the pool from which dispute mediators will be drafted.

Minimum Mediators

The pool selected by the market determines how many mediators are drafted into any given dispute. When more than one mediator is drafted into a dispute, the majority's decision is considered the verdict.

Market Fee

A market creator can specify a percentage deducted from every trade originating from the market.

Market fee incentivises legacy trading platforms, escrows and private trade communities to adopt the Joint protocol without losing their ability to generate revenue through fees.

When both assets of a market exist on-chain (e.g. ETH/USDT), the market fee will be deducted from the base token (ETH).

But if one asset represents an off-chain asset (e.g. USDT/JYP), the fee will be deducted from the on-chain token (USDT).

Protocol Fee

Like the Market Fee, the protocol fee is deducted from every trade. However, the protocol fee is mandatory and applies to all trades across all markets.

Market Access

Joint protocol markets can set access permission to either open or permissioned. When the default configuration is used, a market is considered open and permission-less; anyone can provide and swap the liquidity.

Access can be restricted on the following levels:

• Liquidity Provisioning: When a market creator wants to provide their own liquidity, they can enable permissioned liquidity provisioning. They can also do this if they wish to handpick who can provide liquidity. When enabled, only wallets that have been added to the allowlist will be permitted to provide liquidity.

• Swapping: When a market creator wants to limit swapping to a select number of wallets, they can turn on the permissioned swap. Only wallets that have been added to the allowlist can swap when enabled.

Once a market enables permission by restricting who can provide liquidity, swap or join as a mediator, it is considered permissioned. The market will only do this when required to adjust to regulation or integrate into an existing service.

By default, the Joint Team interface will not showcase permissioned markets unless explicitly requested by the user.

Access permissions can only be configured at market creation time and cannot be undone.