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What is Mango Markets DeFi Spot Margin and Futures on Solana [Solana Series]

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By: cryptotravelsmichael

Michael 0:00
Welcome to the New to Crypto Podcast designed to guide you through the crypto landscape with pinpoint accuracy created for the new and intermediate crypto investor. Join your host Crypto Travels Michael as he takes you through the different facets of getting started and succeeding in your crypto journey. New to crypto podcast brings you new episodes daily Monday through Friday with surprise bonus episodes sometimes on the weekend. Let me ask you, are you new to crypto and don’t know where to start? Are you more experienced but have questions? Then you’re in the right place. This podcast is designed for you coming at you from the Trading Center and the Lifestyle Dezign Studio. Here’s your host Crypto Travels Michael.

Hey, welcome to today’s episode. This is another one in the salon a series and it’s all about Mango Markets. So let’s jump into what exactly is Mango Markets. It’s a trader and maker friendly, decentralized trading platform and the initial core features of the platform will be fully on chain margin trading, limit order books as well as perpetual futures, which are the main drivers of centralized exchange revenue. Moving those to DeFi is an essential step from money Legos to overcome the CeFi platforms. Mango intends to merge the liquidity and usability of CeFi with the permissionless innovation of DeFi, at a lower cost to the end user than both currently provide. In the medium term, the goal is to rival centralized exchanges in trading volume. This is a highly ambitious project, and the team… they’re up for the test. They believe they can achieve this. And they believe that a permissionless ecosystem will produce phenomenal innovations that will overtake centralized finance. So let’s unpack some of the benefits and features shall we? Well, it’s built on Solana so, building on Solana has given it extreme speed and access to the entire Solana ecosystem as well as very low gas or transaction costs. So the low transaction costs although it’s not possible to escape fees, it has low transaction costs Mango financial tools will be comparable to or lower than the cost and CeFi which is centralized finance. So what makes Mango unique. The key ingredients for this vision are low latency, low transaction costs, and full decentralization so they believe in all three ingredients are necessary for the project to be viable, and all three ingredients are finally available on Solana. Mango intends to win the long game and financial services. Rock bottom fees make Mango hard to compete against.

Let’s break down the perpetual futures markets. Mango also offers perpetual futures built on the Mango protocol with its own orderbook so you can trade with up to 10x leverage and enjoy permissionless price exposure to any of the assets in Mango. There’s also a risk calculator tool and this helps estimate liquidation scenarios on leveraged position. Liquidation events occur when your collateral ratio drops below 110%. Since positions are cross margin, there is not always a straightforward liquidation price to provide. With this tool, you can predict liquidations by providing assumptions on an asset prices and other account details. Let’s break down the insurance fund. The Mango program will have some portion of the Mango DAO Treasury as the insurance fund. When there are bankrupt accounts the insurance fund will pay off losses incurred by token lenders or contract participants. And the founders of this project Mango Markets are two people one named Dafydd and the other named Maximilian. Mango Markets has its own token and the Mango Token is a governance token first and foremost. Collectively the token holders have the power to upgrade the protocol as they see fit. This allows token holders to create incentives to reward participation and drive usage on the protocol. After the initial distribution of tokens only the DAO may distribute more tokens via governance proposals. The intent is for Mango Token to be distributed liberally to protocol builders, liquidity providers and Project Contributors in a fully transparent way. And they also have… the token is used in conjunction with the Mango token governance model. So I hope this is basically provided some light as to what is Mango Markets. Definitely like and subscribe to the podcast and chime in here tomorrow for another special episode. If you have a request for an episode, email me or send me a message on the website just go over to the Contact Us page. Until tomorrow, make it a great day.

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Table of Contents

Welcome back to another podcast episode! Today’s discussion will be about Mango Markets, so let’s jump into it! 

What Is Mango Markets? 

Mango Markets is the decentralized, cross-margin trading industry standard. The Mango Markets service rivals head-on with centralized exchanges without compromising, with lightning-fast trade execution, up to 5x leverage, near-zero costs, and excellent interest rates for lenders. 

Mango uses Solana, a high-performance blockchain, and Serum DEX, a decentralized, permissionless, full limit order book. Mango Markets is in public beta right now. 

How Does It Work? 

Mango Markets has a few basic mechanics and advantages.

To begin, the Mango protocol allows users to trade on Serum DEX as a maker or taker with up to 5x leverage, long or short, using limit orders. For added profit, Mango users can receive interest on both deposits and positions, so you could be making net interest on your margin position.

Secondly, users of Mango save a lot of money on Serum DEX trading fees. The tier structure of Serum establishes price rates based on the amount of SRM in an account; the more SRM in an account, the fewer fees you pay and the more money you receive as a manufacturer. 

The highest tier is 1 MegaSerum(MSRM), which is worth 1 million SRM and is out of reach for most individuals. Fortunately, Mango margin accounts are set up so that SRM deposits are pooled across all users, allowing them to reach a higher tier and advantage from the platform as a whole. SRM deposits are not liquidated and are not used as margin collateral.

Risks Of Mango Markets 

When a margin account’s collateral ratio falls below 100%, the ecosystem faces an even greater danger. The value of the account’s obligations exceeds the value of its assets at this time. 

Although the Mango protocol has no fees, it does not have an insurance fund as a result. When a margin account has negative equity, the losses are split among the lenders. When a user’s margin account falls below the required maintenance collateral ratio (MCR) of 110 percent, the account is at risk of being liquidated. 

When the collateral ratio of a margin account falls below 100%, the ecosystem is put in even more danger. At this moment, the worth of the account’s liabilities surpasses the value of its assets.

In this case, the liquidator is given a 1% incentive to liquidate, and the lenders jointly take the account’s negative equity. In exceptional cases, this could result in a liquidation cascade, in which the socialized losses cause more accounts to drop below the required collateral ratio of 100 percent.

Bugs in smart contracts are another important concern. They’re collaborating with the Solana team to have other experienced developers review the smart contract before it’s released as open source. There will be bug bounties for devs to confidentially report any bugs in the code once it is open source.

The key ingredients for this vision are low latency and low transaction costs. Rock bottom fees make Mango hard to compete against.

Here's What We Discussed in Detail in This Interview

  • What is Mango Markets?
  • Benefits and features of Mango
  • DAO, and DAO Treasury Fund
  • Founders
  • The Mango token

Killer Resources


Final Thoughts

All dangers should be clearly understood by users. However, socialized losses and, in particular, liquidation cascades are thought to be exceedingly rare. A liquidator will most feel inclined to liquidate an account immediately as it falls below MCR because of Solana’s quickness.

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Crypto Travels Michael


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