Crypto made asset issuance permissionless It never made derivatives creation permissionless A futures market is not just a ticker and a pool. It is an agreement between contract design, reference pricing, liquidity, matching, margin, clearing, collateral, liquidation and distribution In the traditional derivatives stack, those functions are split across institutions: The exchange defines the contract and operates the matching engine The clearing house becomes the central counterparty, sets margining rules, nets obligations, manages settlement and maintains the default waterfall. FCMs, brokers and prime brokers provide market access, financing, collateral management and house margin It is expensive and slow to coordinate, but robust! CEXs compressed that stack, but kept the most valuable gate for themselves. Everyone has heard what a listing actually costs 😄 Ten years of CEX innovation also failed to bring TradFi-level capital efficiency to defi. Most perp venues still margin positions individually or use static margin tables that barely respond to changing market conditions Portfolio margin is the most powerful tool in derivatives and the most gatekept. It is why a fund runs a hedged book for a fraction of the capital a retail account posts on the same two legs. In TradFi you need an ISDA, a prime broker and a six figure account to access it. We built it into the base layer of the exchange and opened it to everyone.. Margin should scale with the net risk of the whole book, not the gross size of each position alone. Required margin scales with portfolio variance -when one position offsets another, the required collateral should reduce. A real hedge should release capital instead of being margined twice CME is the Industry standard benchmark - SPAN evaluates a discrete risk array and grants cross-position relief through exchange-defined spread credits! Every crypto offset CME offers, is a contract against itself in another wrapper. Bitcoin against Micro Bitcoin. Ether against Micro Ether. Futures against options on the same underlying. Long Bitcoin, short Ether is two different assets, and you need to use a third product, the Ether/Bitcoin Ratio future to access the benefit. Here's how BULK risk engine (inspired by SPAN) performs better: Netting: every position is evaluated against every other position through a live correlation matrix. The measured relationship is the credit, there is no eligible-spread list Regime: maintenance margin changes with the live volatility and trend state across nine market regimes. A position should not require the same margin in a calm trend and a correlated crash Resolution. SPAN is 16 scenarios. BULK runs a 500,000 path Monte Carlo at every point of a 3,024 point grid of threshold by leverage by regime by side. Roughly 1.5 billion simulated paths per asset (and more), each path 25k+ steps, with regime transition dynamics. It prices the real tail and the path into it.. the resulting risk surfaces and correlations are protocol state. Every validator applies the same margin, liquidation and settlement logic. There is no private risk desk granting one account a better margin agreement Same principle CME pioneered, margin the net risk of the book. A generation newer in execution, and transparently decentralised! BIP-1 brings that engine to market creation BULK compresses functions divided between the exchange, clearing house, broker and prime broker into one deterministic base layer. For deployers, the opportunity is larger than launching another long-tail crypto perp. A deployer can build markets around commodities, rates, indices, sector baskets, regional assets or any other product with a defensible reference price and real liquidity. You can prove demand for your idea without persuading any committee! And once that market matures, its traders enjoy the fruits of portfolio margining. The market can become part of a wider capital network, where positions hedge against existing markets and collateral is allocated to the net risk of the whole portfolio Innovate. Deploy. Prove demand. Calibrate the risk. Unlock Portfolio margining. That is BIP-1

We are so early.. back to work, I keep reminding myself perps are 0.1% of traditional derivatives We have to build systems that trad finance offers, without the clunkiness of crypto to accelerate tam 🫡