Native Swap Engine

Enabling PMM Pricing and Atomic Swaps with On-Chain Credit Management

Onchain Executable Orderbook

Native introduces a high-frequency, auto-sign orderbook that seamlessly aligns with prevailing market prices, offering reliable quotes to ensure low latency and a high success rate by utilizing real-time on-chain inventory.

Credit-Based Swap

Example: Credit-Based Swap in User Action

Scenario: Josh, a retail trader, wants to swap 1 ETH for USDC using a Native-powered aggregator/solver. PMM1, a trading house, has pledged 100 USDC as collateral, securing a $100 credit from Native.

Step-by-Step Process:

• (T-1: Josh entered a swap intent to the aggregator. The aggregator checks the latest price and depth from Native orderbook endpoint)

• T0: Josh submits a swap intent through the aggregator.

• T1: Native Swap Engine receives the intent. PMM1 offers a quote of 3600 USDC using the Native Credit Pool as inventory, by leveraging its $100 credit. Even though it doesn’t hold USDC in its wallet.

• T2: Josh signs and approves the transaction to swap 1 WETH for 3600 USDC.

• T3:

  • Native Credit Pool pays Josh 3600 USDC and receives 1 WETH.

  • Native records a long 1 WETH and a short 3600 USDC position on PMM1’s credit record.

  • This entire process occurs atomically in a single transaction.

Post-trade: Credit Risk Management

What if Price Moves?

• If the price of WETH drops to $3598, $2 being cut from PMM credit

• If the price of WETH stays above $3500, PMM1’s credit covers its position. The 100 USD collateral is used to cover the gap.

• If the price drops below $3500, the 100 USDC collateral and the 1 WETH would be subject to liquidation.

The above example assumes the collateral factors for all the assets are set to 100%. Learn more