Seed Calculator

When applying liquidity to a market on The Monaco Protocol, market makers need to apply a spread of prices (odds) with set stake and risk amounts in order to avoid unmanageable liabilities.

The seed calculator takes in seeding parameters in order to generate for (back) and against (lay) prices with their relevant stake amounts in order to apply an even spread of liquidity.

All values are rounded to 2 decimal places.

Parameters

True Price
- The the mid-point on a market between for and against orders, all prices are calculated from this point on the price ladder.
Spread
- The first price on either side of the ladder from the true price.
Steps
- How many rungs up or down the ladder until the next price is determined.
To Return
- Amount to be returned from your for order.
To Lose
- Amount to be returned from your against order.
Include Stake in Returns (true/false)
- Whether or not to include the stake/risk in the return calculations.
Depth Percentages
- Percentage of stake to place.
- For example [100, 75, 50] will use 100%, 75%, 50% of the calculated stake.
- The number of percentages here also determines the depth of the pricing.
Price Ladder (optional)
- The calculator provides prices based on the default Monaco Protocol price ladder, but custom price ladders can be provided.
Price Tolerance (optional)
- How many rungs up and down the ladder the current price on the market can deviate before you would want to reconfigure the true price for seeding. By default this is the same value as steps.

Pricing Example

True price 2
Spread 4
Steps 2
Depth 3
- e.g. a depth percentage of [100, 100, 100]
Price tolerance 2 inferred from steps

Stake Examples

With the same pricing as above:

To return 100
To risk 100
Depth percentages [100, 100, 100]

For Seeds (exclude stake)

Stake 96.15 @ price 2.04 offering a return of 196.15
Stake 93.46 @ price 2.07 offering a return of 193.46
Stake 90.91 @ price 2.01 offering a return of 190.91

Against Seeds (exclude stake)

Stake 104.17 @ price 1.96 risking 99.83 offering a return of 204.17
Stake 107.53 @ price 1.93 risking 99.47 offering a return of 207.53
Stake 111.111 @ price 1.9 risking 99.89 offering a return of 211.11

For Seeds (include stake)

Stake 49.02 @ price 2.04 offering a return of 100
Stake 48.31 @ price 2.07 offering a return of 100
Stake 47.62 @ price 2.01 offering a return of 100

Against Seeds (include stake)

Stake 51.02 @ price 1.96 risking 47.98 offering a return of 100
Stake 51.81 @ price 1.93 risking 47.19 offering a return of 100
Stake 52.63 @ price 1.9 risking 46.37 offering a return of 100

For Seeds - depth percentages of [100, 50, 25] (include stake)

Stake 49.02 @ price 2.04 offering a return of 100
Stake 24.15 @ price 2.07 offering a return of 50
Stake 11.9 @ price 2.01 offering a return of 25

Against Seeds - depth percentages of [100, 50, 25] (include stake)

Stake 51.02 @ price 1.96 risking 47.98 offering a return of 100
Stake 25.91 @ price 1.93 risking 24.09 offering a return of 50
Stake 13.16 @ price 1.9 risking 11.84 offering a return of 25

Code Example

import { SeedManager } from "@monaco-protocol/seed-calculator";

const truePrice = 2;
const spread = 4;
const steps = 2;
const toReturn = 100;
const toLose = 100;
const includeStakeInReturns = true;
const depthPercentages = [100, 50, 25];
const withinAgainstTolerance = 2.06;
const outsideForTolerance = 1.93;
const manager = SeedManager.initialize(
  truePrice,
  spread,
  steps,
  toReturn,
  toLose,
  includeStakeInReturns,
  depthPercentages
);
console.log("FOR\n");
manager.forSeeds.map((seed) => {
  console.log(JSON.stringify(seed));
});
console.log("\nAGAINST\n");
manager.againstSeeds.map((seed) => {
  console.log(JSON.stringify(seed));
});
console.log(
  `\nIs price ${outsideForTolerance} within FOR tolerance? ${manager.checkForTolerance(
    outsideForTolerance
  )}`
);
console.log(
  `Is price ${withinAgainstTolerance} within AGAINST tolerance? ${manager.checkForTolerance(
    withinAgainstTolerance
  )}`
);

cuamckuu / seed-calculator