👨‍🏫Economic System

OpenWorld allows users to freely long or short RWAs and cryptos through trading perpetual contracts with each other. In this architecture, users don’t actually hold any underlying asset, so they don’t need to trust any centralized custody agency. All trading profit and loss is settled by stablecoins secured by blockchains, therefore users no longer need to have a bank account to be able to trade RWAs.

Note:

Like future trading, perpetual trading by itself is a zero-sum game. In this system, players are essentially betting against each other. The total long open interest must equals to the total short open interest for each market, and the profit of one user must come from the loss from another user.

The perpetual contracts are traded via order book model in OpenWorld. The trade price will be formed by the buy and sell forces in the market, which reflects the consensus expectation of an asset’s fair value.

In order to ensure a perpetual contract to trade closely to underlying market’s live price, OpenWorld applies a well-designed funding mechanism. When the perpetual’s price deviates from its underlying’s live price, arbitrage activities will make the two market’s prices converge.

In order to ensure users could always find a counterparty to trade with, market makers are rewarded to keep placing buy and sell limit orders around the current price. Market makers could hedge their risk exposures at underlying markets.

Arbitrage and hedge activities is expected to create strong link between OpenWorld and real world.