🎰Pricing Mechanism

The Panana protocol uses an oracle-based pricing mechanism. When a trade request is made, the Panana protocol invokes the Pyth oracle services to fetch the asset's price. This price is then cross-verified with Chainlink's price feeds. If the discrepancy between these two prices is within the maximum permissible error, the initial price, referred to as the 'Market Price', is accepted.

Once the market price is established, a price fluctuation, known as the 'Spread', occurs based on the direction (long or short) selected by the trader. The 'Open Price', or 'Entry Price', is then calculated using a specific formula.

  • Long Position Open Price = Ask Price + Spread

  • Short Position Open Price = Bid Price - Spread

While closing a position, the spread also exists and the β€˜Close Price’ formulas are vice versa against the β€˜Open Price’ formulas.

The spread of a specific pair is a constant number, and it’s determined by the market volatility of the underlying assets.

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