Spice Edge is a cross-venue and cross-asset margin protocol for DeFi and CeFi derivatives exchanges.
Spice Edge is a cross-venue and cross-asset margin protocol for DeFi and CeFi derivatives exchanges. Users can manage risk and execute strategies across trading venues from a single margin account and risk engine framework. Users can deposit supported collateral assets(incl. crypto, ETFs, equities, and FX) and cross-margin with derivatives positions to execute new forms of capital-efficient strategies.
The core concept underpinning Spice Edge is "risk aggregation", wherein risk is assessed at the portfolio-level, and not per-position or per-collateral asset. Price appreciation in one collateral asset can offset price depreciation in another. Or, price appreciation in a collateral asset can offset positive PnL from an open derivatives position, or vice versa. As a result, the user's portfolio is still considered healthy.
Key concepts explaining how the Spice Edge risk engine functions.
The foundational building block of Spice Edge that enables users to:
Each unified margin account has a dedicated keypair to process deposits and withdrawals of collateral. Currently, only EVM keypairs are supported. Once a deposit is processed, the deposit value(adjusted by the deposited collateral's asset weight) is immediately credited to the user's account equity. The same logic applies for withdrawals too.
Refers to the total value of a user's unified margin account, adjusted with unrealized PnL. It is the sum of:
Deposits increase account equity, while withdrawals decrease it. Cash deposits are credited to the user's account equity at par value, while multi-asset collateral deposits are credited at the asset's respective asset weight. Net unrealized PnL is the sum of unrealized PnL across all open positions.
Spice Edge supports cross-asset margining out-of-the-box. Users can deposit supported collateral assets to their dedicated keypair, and use them as margin to open derivatives positions and execute capital-efficient strategies like Basis, and Relative Value strategies. Every collateral asset has the following 3 properties:
Each non-cash collateral asset has an assigned asset weight, that determines how much that asset contributes to account equity. Say an asset $XYZ is priced at $100. The user deposits 1 units of $XYZ. Spice Edge assigns an asset weight of 75% to the asset. Once the deposit is processed, the user's account equity is credited with $75 of margin that they can now use to open derivatives positions.
Refers to the total initial margin requirement of a user's margin account, inclusive of all open positions and pending limit orders.
Refers to the free collateral available in a user's margin account, which can be used to open new positions, place limit orders, or withdraw. Calculated as the difference of account equity and initial margin requirement.
Each non-cash collateral asset has a distinct asset weight that determines how much a collateral asset contributes to a user's account equity. Asset weights are calibrated offchain and configured within the risk engine. Asset weightage for an asset depends on the following factors:
User-level operations are created and executed using the Spice Edge SDK currently available in TypeScript. The SDK serves as the central operating system for users to create new margin accounts, deposit collateral, submit requests to the risk engine(such as opening positions, placing limit orders, etc) and upon successful validation, executing them on the specified venue.
Spice Edge does not have a trading website or UI of its own, and we do not plan to have one.
Unified margin accounts offered by Spice Edge are non-custodial by design. Keypairs are created and stored with qualified providers like Dynamic.xyz, and Spice Edge's risk engine only holds a partial key share required to deleverage the user's portfolio to maintain a reasonable borrow health ratio.
The risk engine runs on Spicenet's dedicated blockchain rollup built using the Sovereign SDK, enabling Spice Edge to process user requests and other critical operations like price updates at millisecond-level latencies. This also means that risk state of any user is fully verifiable and queryable via RPC.
Health-related formulae dictating account health and liquidation.
initial_margin_requirement / account_equitymaintenance_margin_requirement / account_equitymax(A, B) ; where A = (borrowed_margin / account_equity) and B = max over eligible venues i of [(venue_mm_i * 10000) / max(venue_equity_i, adjusted_equity_i)]How the Spice Edge risk engine validates user actions to ensure the user's account is healthy.
Say a user deposits 2 collateral assets: $XYZ and $ABC, of 1 units each, both valued at $100. Say Spice Edge assigns asset weights of 75% and 80% to $XYZ and $ABC respectively.
The user's margin account now has $155 worth of margin. The user then sends a request to the risk engine to use $50 worth of margin to open a long position on BRENTOIL-USDC on Hyperliquid.
The risk engine validates that the user has sufficient free collateral($50 margin required vs $155 free collateral) to execute the action. The position is now opened on Hyperliquid. After an hour, the position's PnL is now $10.
The user's account equity is now $165, due to positive unrealized PnL from their brent oil position. The user now wants to use another $50 worth of margin to open a long position on NATGAS on QFEX.
The risk engine validates that the user has sufficient free collateral($50 margin required vs $115 free collateral) to execute the action. The position is now opened on QFEX. After an hour, the position's PnL is now -$7.
Let's take a look at the user's risk state at this point. Their account equity is $158($155 worth of collateral and +$3 worth of unrealized PnL). Their initial margin requirement is $100, and their free collateral is $58.
The user now wants to withdraw $XYZ collateral. They have $75 worth of $XYZ in their account, and they placed a request to withdraw the full 1 units of $XYZ. However, the risk engine would reject this, as the user's maximum withdrawable collateral is $58, or 0.77 units of $XYZ tokens.
Summary of actions that a user can execute using Spice Edge.
Users can deposit a supported collateral asset to their associated deposit address to use it as margin for their trading activity.
(Subject to user-specific free collateral limits) Users can withdraw a collateral asset back to their deposit address, thereby debiting their account equity.
Users can place a market order out of their free collateral balance on integrated trading venues.
Users can place a limit order out of their free collateral balance on integrated trading venues.
Users can close an open position on an integrated trading venue.
Users can cancel a limit order on an integrated trading venue.
If the user's borrow health exceeds the protocol-set configuration value(95%), then the protocol partially closes the user's position to pay down the debt, until the borrow health meets a minimum protocol-set configuration(80%)
Current eligible collateral universe.
| Asset | Token | LTV | Category |
|---|---|---|---|
| USDC | hotUSDC | 100% | Stablecoin |
| USDS | USDS | 93% | Stablecoin |
| USD1 | USD1 | 87% | Stablecoin |
| Bitcoin | wBTC | 89% | Crypto |
| Coinbase Bitcoin | cbBTC | 89% | Crypto |
| Ethereum | wETH | 85% | Crypto |
| Liquid Staked ETH | wstETH | 84% | Crypto |
| Solana | wSOL | 77% | Crypto |
| HYPE | HYPE | 74% | Crypto |
| Jito Staked SOL | jitoSOL | 73% | Crypto |
| CC | CC | 66% | Crypto |
| PAX Gold | PAXG | 86% | Commodity |
| Tether Gold | XAUT | 86% | Commodity |
| S&P 500 ETF | SPYon | 92% | Equity (Ondo GM) |
| Nasdaq-100 ETF | QQQon | 90% | Equity (Ondo GM) |
| iShares MSCI Japan ETF | EWJon | 84% | Equity (Ondo GM) |
| iShares MSCI South Korea ETF | EWYon | 84% | Equity (Ondo GM) |
| SPDR Gold | GLDon | 87% | Commodity (Ondo GM) |
| iShares Gold | IAUon | 86% | Commodity (Ondo GM) |
| NVIDIA | NVDAon | 84% | Equity (Ondo GM) |
| US Oil Fund | USOon | 83% | Commodity (Ondo GM) |
| ProShares Short QQQ | PSQon | 83% | Inverse ETF (Ondo GM) |
| Brent Oil Fund | BNOon | 81% | Commodity (Ondo GM) |
| Tesla | TSLAon | 80% | Equity (Ondo GM) |
| Natural Gas Fund | UNGon | 79% | Commodity (Ondo GM) |
| ProShares UltraPro QQQ | TQQQon | 78% | Leveraged ETF (Ondo GM) |
| ProShares UltraPro Short QQQ | SQQQon | 76% | Inverse ETF (Ondo GM) |
| iShares Silver | SLVon | 70% | Commodity (Ondo GM) |
Upcoming collateral listings.
| Token | Asset |
|---|---|
| TSMon | Taiwan Semiconductor Manufacturing Company |
| AMDon | Advanced Micro Devices |
| INTCon | Intel Corporation |
| SNDKon | Sandisk Corporation |
| MUon | Micron Technology |
| ORCLon | Oracle Corporation |
| CRWVon | CoreWeave, Inc |
| SOXXon | iShares Semiconductor ETF |
| KWEBon | KraneShares CSI China Internet ETF |
| RTXon | RTX Corporation |
| LMTon | Lockheed Martin Corporation |
| NOCon | Northrop Grumman Corporation |
Click an asset to view possible strategies with it as collateral.