🛑Risk Control

LEXER aims to reduce risk as much as possible in order to protect liquidity provider's fund and to provide a safe and fair protocol for traders to swap and trade perpetual future contracts.

Oracle Updates: Frontrunning Risks

Risk: By knowing the next Oracle price, bots could potentially harm the liquidity pool if they frontrun the price update transaction with that knowledge.

Control: Continuous on-chain Oracle price update is necessary to maintain the swap and perpetual service on LEXER. Though we are not able to prevent bots from knowing the price on the next Oracle update, one effective way of risk control is to disconnect the order request and order execution.

Implementation: LEXER handles traders' order requests and order executions in two separate transactions.

Price Manipulation

Risk: Manipulators could potentially take deterministic profit by making future contract trades by manipulating the oracle price and draining the liquidity pool.

Control: Multiple past exploits indicate that simply getting Chainlink price feeds may not reflect the actual market condition and that the majority of manipulation takes advantage on thin depth of liquidity to move the market and execute an exploit.

Implementation: After considerable research, our oracle price takes orderbook depth from different centralized exchanges, such as Binance, OKX and Bybit into consideration. Lexer also has standards in picking markets with rich liquidity depth or high market cap to further decrease the chance of manipulation risk.