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OMM(Omnipotent Market Maker)

What is OMM?

OMM(Omnipotent Market Maker) is a new trading and settlement paradigm: everyone trades and settles stochastic assets with NEST system rather than individuals.

OMM obeys the following two laws:

First constraint: c(X) ≥ E(X), the production cost of stochastic asset is not less than the expected value of this stochastic asset.

Second constraint: E(X) ≥ E(F(X)), the expected value of the programmed stochastic asset will be not higher than its cost.

The system is deflationary, and the holder becomes the overall risk taker as OMM shifts from trading between people to trading between all people and contracts. Unlike the popular mechanism, automated market makers (AMMs), and even the majority of market makers we are familiar with (both on and off-chain), OMM never acts as an intermediary or alternate between the two sides of a transaction, but always acts as the sole seller. All system participants are buyers who interact independently with the OMM, which can generate various stochastic assets desired by traders based on three characteristics: infinite liquidity and complete probability space.

The trader gets that stochastic assets by paying a definite cost ( at least equal to the expected value of the stochastic assets, first constraint: c(X) ≥ E(X) ) or gets another stochastic asset by destroying a stochastic asset with a higher expected value( Second constraint: E(X) ≥ E(F(X)) ). The OMM clears the market with each trader. This is why OMM is referred to as “omnipotent”. Based on the law of large numbers, OMM can aggregate all trades, eliminate individual system shocks, achieve system deflation, and distribute risk among token holders.

What does OMM solve?

The OMM mechanism creates an efficient market.

  1. Valid Settlement. OMM can structure atomic liquidation, which means that all excess return can be Settled.
  2. Market Clearing. In a clearing market, there is no rationed or idle stochastic assets, and no excess supply or excess demand.
  3. Infinite Liquidity. The liquidity will not be limited by the LP’s pool size, theoretically OMM can provide infinite liquidity.