Product Lifecycle

The product lifecycle in the AFP is defined by a series of state transitions:

  1. When a Product Builder submits a Product Specification to the Product Registry and it passes the Product Validity Checks it goes to PENDING state.
  2. When the Start Time of the product is reached, the product goes to LIVE state allowing trades to be cleared.
  3. Once the Earliest FSP Resolution Time is reached, the product enters TRADEOUT state during which time only reducing trades can be submitted for clearing.
  4. Once the Tradeout Interval passes, and an FSP exists on the oracle, the product enters FINAL_SETTLEMENT state. If an FSP does not exist on the oracle after the Minimum Tradeout Interval passes, the product remains in TRADEOUT state until its open interest goes to zero.
  5. If the product has reached FINAL_SETTLEMENT state, the Final Settlement Process may occur.
  6. Once the open interest on the product goes to zero (and the Minimum Tradeout Interval has passed if the product is still in TRADEOUT state), the product transitions to EXPIRED state.
stateDiagram
    [*] --> PENDING : Submit Product Spec and pass Validity Checks
    PENDING --> LIVE : Start Time is reached
    LIVE --> TRADEOUT : Earliest FSP Resolution Time is reached
    TRADEOUT --> FINAL_SETTLEMENT : Minimum Tradeout Interval passes AND FSP=X provided by oracle
    TRADEOUT --> EXPIRED : Open Interest == 0
    FINAL_SETTLEMENT --> EXPIRED : Open Interest == 0

The state of a product can always be queried by:

    function state(bytes32 productId) external view returns (ProductState)
Coming soon

PENDING

Product Validity checks

When a Product Builder submits a product specification to the AFP, a number of validity checks are first done before it is accepted by the AFP as a valid product:

  • Check that the Price Quotation and the Collateral Asset are the same.
  • Check the Product ID is globally unique.
  • Check that IMR >= MMR.
  • Check that Earliest FSP Resolution Time > Start Time.
  • Check that Start Time > Current Timestamp.
  • Check that Maximum Tradeout Interval > Minimum Tradeout Interval.
  • Check that entered Field value data types match EVM Data Type.
  • Enforce any version-specific constraints.

If the above all pass, the product is entered into the Product Registry. ## LIVE

Once startTime of a product in the Product Registry is reached, it transitions to LIVE state. At this point, trades can be submitted to the clearing system in that product.

TRADEOUT

Once the Earliest FSP Resolution Time is reached, the product enters TRADEOUT state during which time no new positions can be opened, and existing ones can only be decreased. The purpose of this period is to allow market participants to gracefully exit their positions before they are forcibly closeout, which would incur a penalty.

During the tradeout period, liquidations may still occur, and successful liquidation bids on products in the tradeout period will result in the bidders margin account holding the position.

During this period, Final Settlement Price resolution can also occur, which will anchor the mark price of the product to the FSP. In the case that an FSP is not known after the tradeoutInterval, then the product will remain in TRADEOUT until its Open Interest goes to zero, at which point it will transition to an EXPIRED state.

FINAL_SETTLEMENT

If the FSP is known, the product transitions to FINAL_SETTLEMENT state when the tradeoutInterval passes. At this point, the Final Settlement Process may occur. Once the Open Interest goes to zero, meaning that no margin account has an outstanding position in the product, it can transition to an EXPIRED state.

EXPIRED

If a product is in EXPIRED state then it has no open positions remaining and no new trades can be opened.