MoonRekt digitals are the flagship product of Hxro.
MoonRekt markets are comprised of perpetually linked, time-based digital options.
They are peer-to-peer and utilize a parimutuel model to determine contract payoff. Therefore, they do not require a trader to interact with a market maker or traditional bid-ask order book (as you would in a bi-lateral market or standard double auction market).
Traders in MoonRekt identify the directional movement of the underlying index price during specified periods of time. In contracts of pre-defined lengths (1-minute, 5-minute, 15-minute, 1-hour, 1-day, etc.), participants choose whether the index will be higher (Moon) or lower (Rekt) at the end of the specified period of time.
At the designated open for each contract, the LOCKED PRICE is displayed. The LOCKED PRICE is the strike price for the contract. The LOCKED PRICE for each contract is the same as the settlement price or CLOSED PRICE of the preceding contract. At the end of the contract, when the clock reaches 00:00, the CLOSED PRICE is calculated. The CLOSED PRICE is the last price of the Hxro Index on or before expiration time 00:00.
If the contract’s CLOSED PRICE is higher than the LOCKED PRICE, users who hold Moon positions are in-the-money. If the CLOSED PRICE is lower than the LOCKED PRICE, users who hold Rekt positions are in-the-money.
At the opening of the contract, all positions are aggregated into the contract "pool." At the close of the contract, the in-the-money side will share the pool based on pro-rata size of each in-the-money position.
Trader A analyzes the BTC/USD market and believes in the next 1-Hour candle, the market price will close higher relative to the previous candles close. Therefore, the trader takes a 100 HXRO position, ex-ante, in the contract pool that coincides with that 1-Hour candle on the BTC/USD chart. When the contract goes live, there is 1000 HXRO in the pool with a total of 200 HXRO on Moon (higher) and 800 HXRO on Rekt (lower). Assume the opening (LOCKED) price of the candle is $6500 BTC. At contract expiration (60 minutes from the open), if the market closes ABOVE $6500, the Moon positions will be paid the 1000 HXRO pool on a pro-rata distribution. If the market closes below $6500 at contract expiration, all Rekt positions will be paid the 1000 HXRO pool on a pro-rata distribution.
Because of the pari-mutuel nature of the MoonRekt contract payoff, contract payout is calculated as:
In-The-Money Payout = (P-(P*F))/M
P = Contract Pool (all Moon positions + all Rekt positions)
F = transaction fee (which is currently 3% for all products)
M = Total Moon positions
Therefore, in the example above, Moon positions would be paid 4.85 to 1 calculated as :
In-The-Money Payout = (1000-(1000*.03))/200
Trader A would receive 485 HXRO back on his in-the money 100 HXRO position.
Conversely, if Rekt finished in-the-money, their payoff would be calculated as:
In-The-Money Payout = (1000-(1000*.03)/800 or 1.2125:1
Rekt positions would therefore be paid back 121.25 HXRO for every 100 HXRO position taken.
In both instances, the side that expires out-of-the-money would lose the full value of their position as the entirety of the pool (less transaction fee) is paid out to the in-the-money position.