# Market Maker / LP Program

ClickOptions integrates professional Market Makers (MMs) to ensure continuous, competitive, and transparent option pricing.

**Key Difference**\
Unlike traditional exchanges where each short option requires separate maintenance margin, ClickOptions uses a **portfolio margin model**.

* **Vault = the settlement pool**.
* **MMs = price feed providers**, not fund managers.
* MMs must **lock capital into the Vault like any regular contributor**, ensuring aligned incentives.

### Onboarding

1. **Capital Lock**
   * Each Market Maker must lock capital in the Vault as a regular contributor.
   * Requirement: **250k–1M USDT** (decided by ClickOptions).
2. **Acknowledgment**
   * The Market Maker operates **as a price feed provider only**.
   * They do not control Vault assets directly.
3. **Integration**
   * Connectivity via **API/FIX protocols**.
   * Mass quote + risk controls supported.

### Quoting Obligations

* **Asset Coverage** → Quotes must be provided for **all listed assets**.
* **Discounted Quotes** → At least **25%** of quotes must be priced below external venues.
* **Arbitrage Gaps** → At least **5%** of quotes must intentionally create arbitrage spreads (ClickOptions ASK < external BID).
* **Spread Limits** → Adaptive by moneyness & tenor:
  * Near ATM, short-dated: ≤ **1–2%**
  * Far OTM/ITM or long-dated: flexible up to **45%**
* **Size Requirements**:
  * **Best of Book:** ≥ **0.1 BTC** / **1 ETH**
  * **Depth of Book:** ≥ **5 BTC** / **100 ETH** at key ATM, short-term strikes
  * Adaptive to option moneyness & tenor
* **Presence Ratio** → Must quote **24/7**, ≥ **99.9% uptime** on liquid contracts.

### Scoring & Performance

* **Quote Presence:** ≥ 99.9% uptime for liquid pairs.
* **Quote Quality:** Fulfillment of discounted (25%) + arbitrage (5%) rules.
* **Depth:** Maintain minimum depth at ATM & short-term strikes.
* **Adaptiveness:** Responsiveness to Vault utilization and portfolio exposures.
* **Review:** Performance scored monthly; incentives adjusted based on results.

### Risk Protection Limits

ClickVault has **portfolio-based risk controls** at the Vault level (CAR, Coverage Ratio). On top of this, Market Makers are subject to **dynamic thresholds** for Delta, Vega, and Quantity, scaled to Vault size:

Market Maker risk limits scale dynamically with Vault size.

<table data-header-hidden><thead><tr><th></th><th width="229"></th><th></th><th></th></tr></thead><tbody><tr><td><strong>Limit Type</strong></td><td><strong>Formula</strong></td><td><strong>Scaling Factor</strong></td><td><strong>Example</strong>         </td></tr><tr><td><strong>Delta Limit</strong></td><td><p></p><div class="math math-display">\Delta_{\text{limit}} = \alpha \times \frac{\text{VaultCapital}}{\text{IndexPrice}}</div></td><td>α = 0.5 (50%)</td><td><p></p><div class="math math-display">\Delta_{\text{limit}} = 0.5 \times \frac{10{,}000{,}000}{100{,}000} = 50 \, BTC</div></td></tr><tr><td><strong>Vega Limit</strong></td><td><p></p><div class="math math-display">\text{Vega}_{\text{limit}} = \beta \times \text{VaultCapital}</div></td><td>β = 0.02 (2%)</td><td><p></p><div class="math math-display">\text{Vega}_{\text{limit}} = 0.02 \times 10{,}000{,}000 = 200{,}000 \, USD</div></td></tr><tr><td><strong>Quantity Limit (per 2s interval)</strong></td><td><p></p><div class="math math-display">Q_{\text{limit}} = \gamma \times \frac{\text{VaultCapital}}{\text{IndexPrice}}</div></td><td>γ = 0.1 (10%)</td><td><p></p><div class="math math-display">Q_{\text{limit}} = 0.1 \times \frac{10{,}000{,}000}{100{,}000} = 10 \, BTC</div></td></tr></tbody></table>

**Additional Controls**

* **Frozen Interval:** 5 seconds before new quotes allowed.

### Incentives

<table data-header-hidden><thead><tr><th></th><th width="477"></th><th></th></tr></thead><tbody><tr><td><strong>Incentive Type</strong></td><td><strong>Formula / Mechanism</strong></td><td><strong>Notes</strong></td></tr><tr><td><strong>Revenue Share</strong></td><td><p></p><div class="math math-display">\text{MM Share} = \frac{\text{MM Vault Deposit}}{\text{Total Vault Capital}} \times \text{Vaut performance}</div></td><td>Revenue share is proportional to MM’s Vault stake ratio.</td></tr><tr><td><strong>Fee Rebates (Negative Maker Fees)</strong></td><td>Execution rebates applied automatically</td><td>Encourages tight spreads and liquidity.</td></tr><tr><td><strong>Variable Rewards</strong></td><td>Monthly incentive multipliers applied based on scoring.</td><td>Higher score = higher rebate tier.</td></tr></tbody></table>

### Penalties

* **Non-Compliance:** Rebates reduced, suspension of revenue share, or termination.
* **Abuse:** Wide/fake quotes or manipulation → exclusion.
* **Underperformance:** Repeated failures (< thresholds for 2 months) = downgrade or termination.

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