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Risk Control
LEXER aims to reduce as much rick as possible to protect liquidity provider's fund and to provide a safe and fair protocol for traders to swap and trade perpetual future contracts. Here are some risk controls have been taken and we will continue to monitor and add measure to avoid on forward.
Risk: Bots could take advantage of knowing the next Oracle price to harm our liquidity pool if they front run the price update transaction with a favorable trade with the knowledge of next price.
Control: Continuous on-chain Oracle price update is necessary to maintain the swap and perpetual service on LEXER. We are also not able to prevent bots from knowing the price on the next Oracle update, as such an effective way is to disconnect the order request and order execution.
Implementation: LEXER handles traders order request and order execution in two separated transactions.
Risk: Manipulators could take deterministic profit by making future contract trades from manipulating oracle price, which potentially drains the liquidity pool.
Control: Multiple past exploits indicates that simply getting price feed from Chainlink does not reflect the actual market condition and majority of manipulation take advantage on thin depth of liquidity to move the market toward their favour and execute an exploit.
Implementation: After considerable time of research, our oracle price would take order-book depth from different centralized exchange, Binacne, OKX and Bybit into consideration. Lexer also has standards in picking markets with rich liquidity depth or high market cap to further decrease the manipulation risk.