How to hedge the risk?
LP can dynamically hedge in the other market.
LP can first read exposure to the perpetual contracts from the blockchain.
Then a proper strategy can be used to hedge the risk.
- 1.Try to hedge every single trader from traders
- 2.Hedge the net position change when net position exceeds certain level
- 3.No hedging
Each of the strategy above gives LP different potential risk levels and expected cost and returns.