Cap

Introduction

Cap is a synthetic trading protocol built on Ethereum. Traders submit orders that are priced by an oracle dark feed network. A treasury receives trader losses and pays out their profits.

CAP is Cap's governance token. CAP holders vote on system upgrades and how to use treasury funds. CAP's supply is fixed at 120,000.

Receives staked CAP and keeps track of votes and proposals. A proposal can be executed once enough for votes are reached by the end of the voting period. More info on Cap's governance apparatus can be found in the Governance section.

Treasury

Holds system and trader assets. These include trader deposits and assets bought by governance. Trader deposits are segregated from funds available for use by governance.

Products

Used to register and keep track of products available to trade. Maximum leverage, spread, and funding rate per block can be set by governance for each individual product.

Trading

Receives orders from clients. These can be of two types: new position or position close.

Queue

Queues orders for processing by the oracle network. Once a price is provided, the order is sent back to the trading contract for execution.

Networks

The Cap protocol is currently deployed on the following networks.

Ropsten

Contract	Address
Governance	0xa6Dd9D2d978F76F9f325E79207570eD233104106
Treasury	0x88F4B165EAB80d3607678d54CF9dA2E1EAE17986
Products	0x2DDd0ce3aCb5e5F5d6B9D754E733b3eFFb3C1Ab8
Trading	0x4ecd1C5b4E7b990F7d9bD76fF88cc616fCBdFfd4
Queue	0xe189cD61CCC093258Ec20E00821efb854b8D9B7F
Oracle	0x445c3facc21cc4ef09ee07e476c8b823c1434fdb

# list ropsten proposals
npx hardhat --network ropsten gov:listProposals --governance $GOVERNANCE_ADDRESS

# get the details of a particular ropsten proposal
npx hardhat --network ropsten gov:getProposal --governance $GOVERNANCE_ADDRESS

Mainnet

Contract	Address
Governance	0x16F8637360e88a8C2fDA90dAD68a3dE816eF0162
Treasury	0x6eB80143761ddfE75D5EA87D913EBc1ebd68DE81
Products	0x5777dc3Cc06D55104C63ECDd48CC88908B6ca3d9
Trading	0x5e4974ca44830f6418c286b4117cf2cee5ce3e47
Queue	0x80334765d437e8e6eac5377FB37a0028D71e0167
Oracle	0x54A5675B467aB765F12609d4E95AcF0e3e893676

Protocol Math

Amounts are represented by unsigned integers scaled by 10^18, except in the trading contract where margin, leverage, and price are represented by unsigned integers scaled by 10^8.

Gas Costs

Method	Gas
deposit	180000
withdraw	95000
submitOrder	114000
submitOrderUpdate	85000
liquidatePosition	103000

Running Cap locally

Start by cloning this repo and running:

npm ci

Then start a local ethereum node by running:

npx hardhat node

Finally deploy the system locally by running:

npx hardhat deploy

Upgrades

After making upgrade-safe changes, you can update the local deployment without redeploying everything:

npx hardhat upgrade

Placing trades

Submit an order

Trading.submitOrder(true, bytes32('BTC'), 500 * 10^8, 20 * 10^8);

bool isBuy
bytes32 symbol
uint256 margin
uint256 leverage

Submitted orders are queued while awaiting a price from the oracle network. Once that price is available, they are executed and a new position is opened.

Fully or partially close a position

Trading.submitOrderUpdate(1, 200 * 10^8);

uint256 positionId
uint256 margin

Governance

Creating a proposal

Proposals are executable code containing up to 10 transactions. Each of those consists of a method call with the address of the contract being called, the method signature and the encoded params.

On submission, proposals define a discoverability period meant to allow enough time for CAP holders to discover the proposal, to learn about it and to discuss it before the voting period starts. Voting lasts for 40320 blocks (around 1 week) during which any CAP holder can stake their tokens and cast their vote. Staked CAP will be locked until the voting period is over.

Proposals can only be executed after the voting period is over if the voting result is positive and if a quorum is reached (4% of CAP supply). Some proposals can be expedited if they meet certain criteria. These should contain at most 3 transactions and they should only contain whitelisted method signatures (set by governance). If a proposal is expedited, it can be executed immediately if the voting is positive and a quorum of 15% of CAP supply is reached.

Proposals can be written manually and submitted using the Governance ABI. Or you could use the hardhat tasks provided in this repo to submit JSON proposals which make things more accessible.

JSON Proposal Format

{
  "title": "proposal title",
  "description": "proposal description",
  "discoverabilityPeriod": "1",
  "transactions": [
    {
      "type": "method",
      "contract": "0x1111111111111111111111111111111111111111",
      "method": "methodName",
      "params": [
        { "name": "name", "type": "address", "value": "0x2222222222222222222222222222222222222222"}
      ]
    }
  ]
}

Task files can also be in javascript allowing you to write certain values more easily.

module.exports = {
  title: 'proposal title',
  description: 'proposal description',
  discoverabilityPeriod: '1',
  transactions: [
    {
      type: 'method',
      contract: '0x1111111111111111111111111111111111111111',
      method: 'methodName',
      params: [
        { name: 'name', type: 'address', value: '0x2222222222222222222222222222222222222222'}
      ]
    }
  ]
}

Stake CAP

In order to submit a proposal you need to stake at least 10 CAP tokens. You can do that easily using the gov:stakeAmount hardhat task. Note that the CAP token uses 18 decimals so make sure to multiply your amounts by 1e18. (e.g. 1 CAP becomes 1000000000000000000)

# approve governance to access a certain amount of your CAP tokens
npx hardhat capToken:approve --cap "${CAP_TOKEN_ADDRESS}"

# stake your tokens
npx hardhat gov:stakeAmount --governance "${GOVERNANCE_ADDRESS}"

# check your staked balance
npx hardhat gov:getStakedBalance --governance "${GOVERNANCE_ADDRESS}"

Submitting a proposal

Now that we have the JSON proposal and 10 CAP tokens staked, we can go ahead and submit the proposal. There are multiple ways to submit it (e.g. programmatically using web3 or similar libraries, manually on etherscan, or using a community webpage...). At this time, the simplest way is to use the gov:submitProposal task available in this repo. Just run the task and it will guide you through the submission process.

npx hardhat gov:submitProposal --governance "${GOVERNANCE_ADDRESS}"

Voting

Once a proposal is submitted and the discoverability period is over, the proposal becomes open for voting. If you don't have any CAP staked, you will need to stake some as described in the 'Stake CAP' section above. Once you have tokens staked, you can go ahead and cast your vote using the gov:castVote task.

npx hardhat gov:castVote --governance "${GOVERNANCE_ADDRESS}"

This task will ask you to provide the ID of the proposal you're voting on and to select whether you want to support the proposal or vote against it.

Executing a proposal

Once voting is complete and the proposal is accepted and executable, anyone can execute it using the gov:executeProposal task.

npx hardhat gov:executeProposal --governance "${GOVERNANCE_ADDRESS}"

Examples of common proposals

Scripts

Deploy

npx hardhat deploy

Update

npx hardhat upgrade

On Ropsten and Mainnet, upgrades can only be executed through governance proposals.

Liquidator

A sample liquidator bot can be found in scripts/liquidator.js. This script fetches events from the trading contract every 60 seconds and builds a cache of open positions across the system.

It then uses 3rd party price APIs to determine whether any open positions should be liquidated. If so, it calls the liquidatePositions method of the trading contract with the ids of the positions to liquidate.

Testing

npm test

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