> For the complete documentation index, see [llms.txt](https://myxfinance.gitbook.io/myx.finance-v2/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://myxfinance.gitbook.io/myx.finance-v2/readme/key-concepts.md). # Key Concepts This section introduces the essential concepts needed to understand how MYX V2 operates. Refer to Whitepaper for more detailed information. *** ### 1. Permissionless Market Lifecycle On MYX V2, perpetual markets are not curated. Anyone can deploy a market by specifying a base asset and a quote asset through the factory contract. A market becomes active only when: * Liquidity thresholds ($20,000 worth of total liquidty) are met * $400 worth of Oracle fee charged on a pro-rata basis against the vaults If trading activity falls below sustainability requirements, the market enters a reduce-only state and can eventually deactivate. Markets exist because capital supports them — not because an operator approves them. *** ### 2. Asset-Pure Vaults Each market contains two independent liquidity vaults: * **Base Vault** — holds the underlying asset * **Quote Vault** — holds the stable quote asset Liquidity providers choose which exposure they want. Base LPs remain exposed to the underlying asset.\ Quote LPs remain exposed to stable capital. There is no forced rebalancing between the two. Vaults underwrite only the residual exposure that remains after trader positions net against each other. *** ### 3. Asynchronous Matching Trades do not automatically push full exposure to liquidity providers. When opposing trader positions exist, they net internally. Vaults only absorb the imbalance that remains after trader-to-trader netting. This improves capital efficiency and reduces unnecessary LP risk. Vaults act as residual counterparties — not permanent ones. *** ### 4. Oracle-Anchored Execution with Slippage Shaping Execution prices reference verifiable oracle feeds. However, liquidity is not infinite at a single price. A deterministic slippage curve shapes execution around the oracle anchor. In balanced markets, impact remains shallow.\ In one-sided markets, impact increases. This mechanism: * Compensates LPs for imbalance * Discourages toxic accumulation * Stabilizes long-tail markets Execution remains rule-based and reproducible. *** ### 5. Quote-Margined Isolated Positions Positions are: * Collateralized in the market’s quote asset * Isolated by default Margin, funding, fees, and PnL are all accounted for in quote units. Liquidation thresholds are deterministic and publicly computable. Traders cannot lose more than their posted collateral. *** ### 6. Deterministic Risk Scaling Risk parameters scale with measurable liquidity conditions. A Liquidity Rating influences: * Margin requirements * Slippage sensitivity * Funding responsiveness * Profit lock duration Risk increases automatically in thinner markets and relaxes in deeper ones. Parameters apply prospectively.\ Existing positions are not retroactively altered. *** ### 7. Lock Coefficient & Forced Take-Profit (FTP) When residual exposure requires cross-vault collateral usage, lock coefficients determine: * How much collateral is immobilized * The maximum payable profit * The forced take-profit threshold If profit exceeds posted collateral capacity, the system automatically realizes the position. Liability never exceeds collateral. Solvency is mechanically enforced. *** ### 8. Keeper-Based State Relay Keeper nodes: * Submit liquidity ratings * Execute orders * Execute liquidations They compute under public rules. They cannot alter formulas or intervene discretionarily. Integrity comes from deterministic logic and competitive verification — not trust in operators. *** ## Conceptual Summary MYX V2 separates: * Distribution from settlement * Capital from execution * Risk calibration from discretion * Liquidity provision from forced rebalancing Markets form through capital.\ Risk scales through formulas.\ Settlement executes through code.