Hybrid Approach

Optimizing speed and safety for the best experience

stVol employs a hybrid approach with on-chain settlement and off-chain orderbook management.

Initially, stVol aimed to implement the entire options trading process fully on-chain. However, this approach encountered several technical challenges:

• Users needed to sign each order individually from their wallets, creating inconvenience.

• A few seconds of latency existed between placing and executing orders, which is critical for ultra-short-term options.

• Each order, regardless of execution, incurred gas fees, making the process cost-inefficient.

To optimize user experience in terms of trade execution, orderbook management, and costs, stVol adopted the hybrid model of on-chain settlement and off-chain orderbook management, similar to methods used by other perpetual DEXs like dYdX.

Visit our Substack post to learn more about hybrid.

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In this hybrid system, stVol introduces the concepts of Deposit and Withdraw.

Users only need to input the amount they wish to trade in an on-chain contract. This locked amount acts as a margin. Withdrawal is always available, whenever a user decides to stop trading on stVol.

Importantly, stVol does NOT take ownership of the stablecoins during these processes. With stVol, your funds always stay on-chain and you remain in full control of your stablecoins at all times. There are no central intermediaries that hold your private keys. Thus, both Deposit and Withdraw are on-chain actions, requiring wallet signatures.