Temperature check on new ideas that attract more liquidity providers/market participant to Mango

GM Mango community

Anas here from Investin!

We recently open sourced code for Mango based funds that allow traders to pool investments in a non-custodial manner and trade on Mango through a Program (PDA) owned Mango Account using the delegate feature. This allows full access to Mango and enables us to step into SocialFi like many big exchanges do, by having an active Social trading systems that helps us onboard more users/liquidity with the help of pro users.

If we play it right, I believe Investin can play pivotal role in solving two of Mango’s major problems i.e. lack of liquidity and participants which is partly due to blockchain performance issues and misaligned LM incentives. Looking into the Solana’s active development I believe this issues should be solved with new upgrades that will be going live in coming months. And for the liquidity issues I personally believe the incentivization model i.e. distributing $mngo or $srm tokens is not sustainable and may not work in the long run. Instead we propose a decentralized standard for market making model that is commonly used on CEXs which can easily be ported to DEXs like Mango Markets for attracting more liquidity into markets in a decentralized and non-custodial way using Investin’s Mango based funds that can be extended into a contractual agreement where any protocol or DAO can lend x amount of capital to any market maker/ trader to maintain liquidity on specified conditions that are executable on-chain by anyone. For instance, the conditions could be like:

  1. Market maker must Lock-up x% capital on the mango account as insurance to access the fund
  2. Having a hard Stoploss at x% which is triggered if the health of mango account goes below x% or the pnl. (The lockup as insurance should help with slippage here)
  3. The market maker will be restricted to particular markets only by building a relayer program for gate-keeping all the interactions on the mango account.
  4. If the fund goes above a certain leverage the market makers access to fund will be revoked and the position will be closed off in a gradual way. ( I know this needs more work but we can build solutions for this)

To be honest, the biggest fear with such a system is that market makers can rug by counter-trading even with all safety features but I think we should look at it in an optimistic manner and not forget that decentralized systems always start with initial participants having a goodwill which enables the system to expand and grow more resilient to actions taken in bad faith.

And we have been building on Mango since day 1 and would love to contribute more on growing Mango into worlds biggest margin exchange hence it would be really helpful if fellow community members can help us refine the idea discussed above and let us know if we are thinking in right direction and also help us gauge if there is need for such solution.

p.s. if you are an market maker or an investor please please dont hesitate to reach out to me with any feedback or ideas, you can find me on twitter @allinbitcoin_ and on tg @aak_dev