Hedged Assets

    "Hedged Assets" is our new innovative approach that we implemented in Ardor.
    Objectives:
1. Creating new trading pairs.
2. Increasing Ignis trading volumes.
3. Increasing ArdorBG grid trading profits.
4. Increasing Ignis deflationary pressure.

    Ignis delisting from the CEX and almost no trading volumes made us consider integrating assets into Ardor, but due to the complexity of the bridges, the need for developers, the dangers of hacks, and regulatory requirements, the task was overwhelming for us. Therefore, we decided to use a hedging method in Ignis. To do this, we need three main players:

1. Asset issuer

2. Market Maker 1, which we will call "MM"

3. Market Maker 2, which we will call "ArdorBG"

    The task of the Asset Issuer is to issue the necessary assets in which to hedge. In addition to issuing assets, it must also cover the losses of the MM, so it applies a trading royalty of 0.1% to the assets. We adopted this percentage completely experimentally, hoping that it will be sufficient to cover the losses of the MM and not interfere with normal trading.

    ArdorBG uses grid trading so that MM can trade with hedged assets. Here, ArdorBG's role is the standard one that it performs with all other trading pairs, the only detail is that MM is obliged to buy back the positive balance of the hedged assets that ArdorBG would buy (not those that it previously sold). I guess the previous sentence is complicated to understand..... When using grid trading, ArdorBG places orders to buy and sell a given asset, but when it comes to a hedged asset, the only value behind this asset is the Ignis collected from trading royalties. Therefore, when ArdorBG sells a hedged asset, it receives its value in Ignis, but there is still no real value behind this asset. 

    It is time to point out here that hedged assets are not intended for trading by the community because they carry enormous risk! 

    The role of the MM is the most difficult of course, but I will dwell on it briefly because it is not part of the ArdorBG agreement (except for buying the positive hedged balance). In certain cases, he sells real assets to buy hedged ones and in other cases, he sells hedged ones to buy real ones.

    The risk of stopping trading with hedging assets is entirely possible. This is still an experimental approach where problems are entirely possible. Therefore, I will once again appeal to the community to avoid trading with such assets. And to investors to be calm, because the risks for ArdorBG are almost zero.