OTC Exchange
Last updated
Last updated
Over-The-Counter (OTC) exchange is a common and effective mode of operation in both mature and newly formed ecosystems. It addresses liquidity issues for both makers (trade requesters) and takers (trade counterparties) without impacting market value. Traditionally, OTC service often relies on mutual trust or a centralized custodian.
Paddle's OTC service offers a non-custodial marketplace that allows anyone to initiate an OTC deal across the market. Here are the key terms and processes:
Given Assets: The assets the maker is offering, which can be individual assets (such as ERC-20 or ERC-721 tokens) or a basket of assets.
Required Assets: The assets the maker wishes to receive in exchange, which can also be individual assets (such as ERC-20 or ERC-721 tokens) or a basket of assets.
Expiration: The period during which the OTC offer remains valid.
Counterparty: The maker can specify the address of a particular taker to prevent others from taking their agreed deal. If no specific taker is designated, anyone from the market can fulfill the OTC request.
Similar to our loan design, makers are not required to deposit their assets into the smart contract immediately. They only need to authorize the transfer via MetaMask or another non-custodial wallet. The assets will only be transferred and swapped to the counterparty after a taker has successfully filled the request.
If a maker moves their assets out of their account before the request is filled, the taker will encounter an error message stating that the request cannot be completed due to the absence of the required assets. This ensures secure and user-friendly asset handling, minimizing upfront commitments until the OTC terms are met by a taker.
Initially, our OTC service will charge a fixed fee (now set as 0) to the taker for each swap (please refer to the page for details). This fee may be adjusted in the future based on market conditions or decisions made by the Paddle DAO.