I think there was some good discussion on the Discord AMA last night about how exactly Mango should be prioritising the listings. In this thread I try to sum up the current facts and provide some data to suggest we move forward.
I may get some of the facts wrong so please correct me below if I’ve stated something inaccurate.
Current State of Play
The way Mango v3 currently works, we are limited to 15 “oracles”. An oracle being a price feed (Switchboard/Pyth) for a trading pair. Because Mango is currently using USDC as the home currency, these pairs currently are:
That’s six slots down, 9 to go.
Each oracle can be used to support either a token listing (for borrowing/lending and spot-margin trading) or a synthetic Perp listing. A token listing for borrowing/lending requires a Serum market, as this is the underlying spot market used on Mango.
Currently we only have one perp, BTC-PERP.
The issue of 15 slots limit will be resolved with time, however it’s not certain how close we are to that, and the depenency is apparently Solana 1.8 which enables a lot of optimisations to get more oracles supported.
This means, we have to make the most out of these remaining 9 slots, given we may be stuck with them for at least a few months.
What next? Spot vs Perps
I think the original idea was to get the “most” out of using an oracle slot by supporting it as a token for spot-margin and for perp.
Some have suggested that since Mango is on Solana, it should prioritise Solana ecosystem tokens, particularly because there would be a lot of Solana users storing their net worth in these and they would be useful to allow as collateral, and if they were allowed as collateral then may as well add a PERP as well to make the most of that oracle slot.
However, this comes at the cost of one of Mango’s competitive advantages: orderbook Perpetual contract trading.
Spot-Margin / Borrowing & Lending Collateral Quality
As we have seen with the MNGO token support, the collateral is not of high enough quality to allow for a low haircut. In fact, if you deposit $100 of MNGO on Mango, then you only get $20 worth of margin to open positions on perps or make other margin trades.
Collateral quality broadly is defined as something like:
(a) How good is the liquidity? (thickness of books)
(b) How much volume is there? (how much value is traded using (a))
(c) How volatile is the asset? (how reliably can we liquidate collateral / perp positions?)
(d) How stable is the supply mechanism? (this impacts the rate formula used for borrowing/lending of the asset, which is deterministic by utilisation and whatever Mango sets as the max)
(e) How much of the supply is owned by influential insiders who could abuse Mango to cash out where there is insufficient liquidity to sell?
All of these speak to avoiding massive insurance fund drawdowns and potential socialised losses and facilitating a robust and orderly market for key stakeholders:
- Normal mango traders on spot-margin
- Liquidators who have to clean up the mess when markets do get frothy
- Lenders who are providing the juice for spot leverage
- The perp traders who are relying on the integrity of their positions (to avoid ADL/social loss on themselves)
All this to say: collateral quality and perp market quallity matter, and have big implications if not taken seriously and parameterised accordingly.
Of course, we have to support MNGO because it is Mango. But should this be the trend of what we use remaining slots for in the short-term, to add collateral that is such low quality that we need an 80% haircut on its usage? Or, should we focus on using the lots to support a broader line of Perps, synthetically, which do not require any token support or Serum spot market activity.
Comparisons to other Perps Exchanges (dYdX and FTX)
One project that Mango has been compared to often is dYdX, who is one of the more successful hybrid DEXes, based on Ethereum, that runs perp markets. Their product is inferior because it is requiring users to have USDC collateral, whereas Mango is multi-collateral. Nevertheless, here’s their list:
The volume here indicates that it is quite dominated by alternative layer 1’s. They have certainly not prioritised to add ERC20 projects, but instead chosen to let traders use USDC to trade whatever crypto assets they want.
Another interesting dataset is FTX. Here is the past 60 days volume (to help control for “hype” effects without unfairly disadvantaging recent listings) for all 159 perps listed there: Top Perp volume - HackMD
The top 25 I provide here:
So, aside from RAY and SRM there’s not much of a focus of the volume on native Solana tokens
There are some ERC20’s where they are Sollet-wrapped. But ADA, XRP, DOGE, AVAX, DOT – these are not assets that have a Serum market.
The main issue I’m trying to identify here, which others last night on Discord expressed as well, is that the most popular perpetual contracts out there in the market are not necessarily the popular SPL token and Serum spot markets. Given the limited slots, we need to choose wisely between whether we are pushing to support the borrowing/lending and spot-margin side of Mango or the Perpetual contracts market on Mango.
So what I suggest is:
- List RAY as this meets similar standards as SRM and would be suitable for both sides of Mango’s projects.
- List perps on ETH, SOL, SRM, RAY, USDT, MNGO. (this takes no slots)
This leaves 8 slots remaining.
For those 8 remaining slots we should add perpetuals on:
- ADA, AVAX, DOT, LINK, DOGE, LUNA, ATOM, SUSHI
It’s very likely based on voting dynamics on Mango that SBR and COPE will just be pushed through as tokens, which takes up 2 slots. And means that the above 8 suggestions need to be economised on too.
But overall, the community should decide what direction it wants to go on either in supporting Perps market in shorter term or just continuing to use slots to support Solana SPL token projects.