Cooperative Price DIscovery
no front running
Cooperative price discovery (assert / insure) versus competitive (bid / ask)
The Microtick project’s goal is to provide a globally agreed upon, real-time consensus price - without requiring direct financial coupling to any underlying asset. The project is built on decentralized blockchain technology and the game-theoretical foundation of Schelling points.
Cooperative price discovery uses short-term assert / insure premium quotes that work together to bring improved consensus price stability as market makers compete to offer the lowest premiums for buyers. It works well alongside traditional competitive price discovery such as order books or AMMs - as a liquidity engine due to arbitrage opportunities that come up during times of high market volatility.
Learn more in the Microtick tech walkthrough. Follow along with the PDF slides here.
Learn about Microtick market making here.
Order book price discovery on left
Microtick price discovery on right (trading 5-minute, 15-minute and 1-hour price assertions)
simulator source code available here
Speculate and hedge with short-term leverage
Cooperative price discovery results in a two-sided marketplace where traders can get the best real-time premiums for price insurance on a very short-term basis. Choose a trading timeframe that suits your needs: 5 minutes, 15 minutes, 1 hour, 4 hours, or 12 hours. Or, take the role of “Market Maker” and provide your own assertions about an asset’s price and volatility, and collect the premiums traders pay.
Status-quo price discovery encourages centralization
This Cosmos-based platform aims to address the inherent centralization in the way price discovery is usually conducted. As popularized by the book "Flash Boys," centralization stems from the fact that price information is more accurate when a passive observer is closer geographically - or temporally - to where trade matching occurs. This type of centralization can also contribute to order execution problems such as front running where profit can be made by acting as a middleman in the order flow pipeline without incurring any risk or adding any liquidity to the market.
Beyond the order book
Because Microtick’s consensus price can be hedged in either direction, it has the ability to decouple price discovery from order book trade execution and bring the benefits of a global, real-time reference price to decentralized, private trades on the underlying asset - wherever in the world they may occur. We believe this approach has better long-term benefits for on-chain trading than building a decentralized order book or building oracles to import data into smart contracts using trusted data sources.