Profit & loss · shadowpaper Docs

Winning closes pass through a deadband, an asymmetric-impact scale and a 2% win fee; losing closes pay only the loss itself.

Winning closes#

A winning close is processed in three steps, in this order.

Deadband (0.2 bp)

The gain is measured as if the exit price were 0.2 bp (entry price ÷ 50,000) less favourable. A gain within this band pays zero and the margin is returned.

Asymmetric impact

The remaining gain is multiplied by a scale factor that depends only on the size of the price move, not on position size. Small moves retain the least; the factor rises toward a ceiling of 90% as the move grows. Moves between 0.75 and 6 bp are reduced slightly further. See Asymmetric impact.

Win fee (2%)

2% of the scaled gain is taken as the protocol fee. The trader receives the remaining 98%.

These three steps are the only deductions on a trade. None of them is a fee on notional or a spread on price, and none applies to losses.

Losing closes#

The loss equals the price move multiplied by notional, capped at the position's margin. Nothing is added to it. While the payout queue is empty, a 2% LP-side fee is carved out of the LP's gain, not charged to the trader. While the queue is active, this fee is waived.

Every realised loss mints SPAPER to the trader. See SPAPER minting.

A close that executes at or beyond the position's liquidation price settles as a liquidation.

Example: a winning close#

Alice's 100× BTC long (margin 100 USDT, notional 10,000 USDT, entry 80,000) is closed at 80,800, a 1% move.

Step	Amount
Raw gain (1% of 10,000)	100.00 USDT
After deadband	99.80 USDT
After impact scale (× 0.8832)	88.15 USDT
Win fee (2%)	−1.76 USDT
Net profit	86.38 USDT

deadband   = 80,000 ÷ 50,000                       = 1.6
move       = (80,800 − 80,000 − 1.6) ÷ 80,000      = 0.998%
gain       = 10,000 × 0.998%                       = 99.80
scale      = 0.9 ÷ (1 + 1 ÷ (move × 15,000) + 100,000 ÷ (10⁶ × move × 814.598)) ≈ 0.8832
scaled     = 99.80 × 0.8832                        ≈ 88.15
fee        = 88.15 × 2%                            ≈ 1.76
net profit = 88.15 − 1.76                          ≈ 86.38

← Scroll sideways for long formulas

Alice's balance returns to 100 USDT margin plus 86.38 USDT profit, 186.38 USDT in total, when the LP can pay in full.

Example: a losing close#

The same position is instead closed at 79,600, a 0.5% move against Alice, while the payout queue is empty.

Item	Amount
Loss (0.5% of 10,000)	50 USDT
Margin returned to Alice	50 USDT
LP-side fee (2% of the LP's gain)	1 USDT
Net to the LP	49 USDT
SPAPER minted to Alice (49 × 100)	4,900 SPAPER

loss        = 10,000 × (80,000 − 79,600) ÷ 80,000 = 50
LP-side fee = 50 × 2%                             = 1
LP gain     = 50 − 1                              = 49
mint        = 49 × 100 SPAPER per USDT            = 4,900 SPAPER   (net LP below 2,000,000 USDT)

← Scroll sideways for long formulas

Alice pays exactly the 50 USDT loss; the fee comes out of the LP's side, and the loss mints 4,900 SPAPER to her wallet.