Penalty

Penalty applies when you offset a position before 6h holding period

To replicate on-chain liquidity constraints, the mini-game also incorporates a penalty mechanism. The penalty mechanism has been implemented to make sure that users of 1xMM Pools will not keep positions for few minutes, after a significant market move.

Therefore, if you hold a position less than 6 hours:

• You are subject to a early-closure fee of 20 bps, which will decrease over the 6 hours:

$$early\_closure\_fee_{t_0,t,6h} = 20 \; bps \times \frac{t - t_0}{360}$$

• If your position generates a positive PnL, you will receive only the pro-rata temporis of the profit:

$$profit\_received = position\_profit \times \frac{t - t_0}{360}$$