Exchange Mechanism: Offer Queue
The Offer Queue is the exchange mechanism of the Straato Market. The Offer Queue serves as the price-setting mechanism that guides transactions, while playing a fundamental role in regulating prices and eliminating market noise.
The Offer Queue is exactly as you might expect - a “queue” of Straato listed for sale. The Straato listed in the queue are ordered by their listing price such that the lowest priced offers are placed before higher priced offers in the queue. For Straato listed at the same price, the one listed earlier is positioned first. For those with knowledge of basic data structures, the Offer Queue is a standard priority queue on Straato list prices. For those more familiar with level 2 Market data, both the Ask and Bid books may also be described as priority queues. The Straato Market Offer Queue is exactly analogous to the Ask book, with a few key adjustments, described below. Basic Function: Buying & Selling The Offer Queue connects buyers and sellers. Individual traders simply list offers to sell Straato via their Dashboard. Once listed, offers will appear in the Offer Queue, conforming to the rules of the queue described below. Once listed on the Offer Queue, Straato may be purchased by any other trader in the Market. In this way, sellers always initiate transactions via the Offer Queue and liquidity is finite. Think of the Offer Queue like a single continuous auction. When a trader lists Straato on the queue, they must specify the number of Straato to be sold and the price at which to sell them.
Traders may purchase Straato from the start of the queue only. Based on the rules of the queue, this implies that Straato are always purchased in order by price, from lowest to highest. Traders must specify the maximum price at which they are willing to purchase a Straato for – all Straato Market purchase orders are limit orders. Given that many people may be purchasing Straato more or less concurrently, we cannot guarantee that your order will be filled at the exact market price you expect, so limit orders allow us to fill orders more flexibly and consistently. Similarly, Straato may be priced differently, so you may actually pay different prices for each Straato when purchasing multiple.
No purchase will be executed for a Straato priced higher than the limit price specified. For example, if I purchase 5 Straato for a maximum price of $10 each, the most I could possibly pay on the transaction would be $50, although I may pay significantly less than that, depending on the queue distribution. Additionally, it is possible that I may end up only being able to purchase 3 Straato even if I specified my desire to purchase 5 in my order. This would occur if there were only 3 Straato priced below my $10 limit.
Only Straato that have been “offered” via the queue are available to buy – hence, there is always limited liquidity in the Straato Market, which plays a key role in driving prices. There may even be times at which the Offer Queue is empty and there is no liquidity – buying is impossible at these times, as buys are always executed in real time (there is no equivalent of a Bid book in the Straato Market).
Traders may only offer or purchase a limited number of Straato in one transaction, so as to prevent individual traders from monopolizing liquidity or clogging the queue. For now, automatic trading is prohibited in accordance with the Straato Market’s Terms of Services.
Technical Details
The Straato Market Offer Queue has a number of technical rules and parameters, described here.
Ordering
The Offer Queue is ordered by the following factors, in order of precedence: 1) Price – The Queue is always ordered from lowest to highest price of listings at all times. 2) Seller (Market Maker or Trader) – Offers at the same price made by actual Straato traders will always be listed before offers executed by the Market Maker (more details on the Market Maker in the next section). 3) Time – Offers executed earlier will be listed before offers executed later, assuming the price of the offers is the same and both offers were executed by traders.
This ordering mechanism allows later offers at lower prices to sell before offers placed earlier, at higher prices. This can be leveraged in potential trading strategies.
Price Restrictions & Offer Spacing
Offer Splitting: When a trader lists Straato for sale on the Queue, the full offer is split into individual offers of 1 Straato each. For example, if a trader makes an offer of 3 Straato, this will be broken up into 3 separate offers of 1 Straato each for placement onto the Queue. In order to conform to other queue rules, the list prices of individual Straato may ultimately increase from the original offer.
Minimum Price Floor: All new offers must be priced at or above the current Market “minimum price floor.” The minimum price floor is equal to the price of the last Straato to be sold in the current cycle and is undefined at the start of a new trading cycle (although all new offers must still be priced at or above $1).
Price Spacing: Straato listed on the queue may be restricted to prices at specific multiples (e.g. only multiples of $0.05), in order to facilitate more effective and rapid price increase, combatting price stagnation.
Maximum Assets Per Price: No more than a fixed number of Straato may be listed or sold at a single given price (i.e. $1.01) during a single trading cycle. This rule prevents price stagnation in the Market, which is detrimental to the efficacy of the reset mechanisms and liquidity balance.
Price Updates
Any offers with specified prices below the minimum price floor will have their prices automatically increased to the next lowest allowed price. Similarly, if a specific price (i.e. $10) already has the maximum allotted number of Straato listed at it, the price of any new offer listed at the same price will automatically be increased to the next lowest available slot. Listing prices will only ever increase when adjusted automatically and will always be as close as possible to the requested prices in accordance with the rules of the queue.
Any offer listed for prices above what one might consider reasonable (e.g. $1000 listing when the current market price is $10) in the Market will be flagged and rejected.