The Mango Vision

Mango aims to combine the liquidity and straightforward experience of CeFi with the open, permissionless creativity of DeFi, while keeping costs lower for the end user than what both models offer today. To pursue this, Mango provides margin trading and perpetual futures, supported by decentralized governance that determines how the protocol develops. In the near-to-medium term, matching centralized exchanges in trading volume is a bold ambition, but Mango Markets sees no major blockers. Over the long term, Mango believes a permissionless ecosystem will spark impressive, unexpected, and hard-to-predict innovations that eventually surpass centralized finance.

Why Mango Markets Will Succeed

Three core elements support this vision: low latency, low transaction fees, and full decentralization. Mango believes each of these is required for the project to be practical, and that Solana finally provides all three.

Latency

On Solana, block production happens in about one-second intervals. Even if one second can still be noticeable, Solana’s targeted 400ms latency gets close to the practical edge of what humans typically perceive. A clear advantage of low latency is a better user experience-people often feel uncomfortable while waiting for their transaction status. Yet there is also a less discussed benefit: improved liquidity. Quote spreads from liquidity providers depend directly on how long it takes to update quotes. The slower the quote updates, the higher the chance of meaningful price swings hitting the market maker, which forces wider quotes. With today’s roughly one second latency, Mango believes the underlying bid-ask spread can be competitive with centralized exchanges.

Transaction Costs

Low transaction costs are arguably the foundation of modern finance. Mango’s view is that financial innovation only truly improves things when it reduces transaction expenses. As a result, transaction costs across all Mango financial products are expected to be similar to or below the fees seen in CeFi. Mango believes this has to be the case. Lower costs reflect better efficiency, and more efficient systems and tools typically perform better over time. Fees cannot be avoided entirely-service providers within Mango protocols (for example, liquidators, an insurance fund, and developers) must be compensated. Still, Mango intends to keep fees on the lower end.

Decentralization

Attempting to reach competitive latency and pricing by concentrating essential components (such as the orderbook) is expected to break down over the long run. Centralizing any part introduces security weaknesses and can strongly reduce composability. Ultimately, the party running the centralized component controls how other applications interact with it, and that operator typically lacks both the motivation and the capacity to enable every interested party to contribute improvements. Because of that, centralizing core components sacrifices the major benefits of permissionless innovation. Mango Markets plans to keep those upside opportunities.

No Presales, Decentralized Governance

The Mango Token is designed to govern the protocol. The majority of MANGO will be held in the DAO treasury and then distributed based on token holders’ preferences. At the same time, Mango’s governance vision is that decision-making should reward people who support protocol services (such as liquidity providers and oracles) as well as those who build new services (such as developers and other contributors). The commitment to share the largest share of the DAO’s power and resources with future contributors is intended to draw in skilled, ambitious builders. Finally, consistent with the crypto values of transparency and equal access, there will be no token presale.

In the end, Mango plans to focus on the long-term game in financial services. Low latency helps make the tools usable. Very low fees make Mango difficult to compete against. Decentralization makes Mango harder to disrupt through centralized incompetence or malicious behavior. Governance that openly shares power and wealth with builders, without restrictive allocation, should attract the best people to build and run the protocol. And because everything is permissionless, countless small experiments can happen-experiments that may lead to transformative innovations. Mango is committed to building according to this vision, and hopes you’ll join.

Margin Protocol

Highlights

Design

The first version of the margin protocol layers borrowing and lending on top of the Serum Dex v3. Users control a margin account, which is then linked to a Serum dex open orders account for each market within the group. Users can deposit any tokens included in the group, and the value of those deposits expressed in the quote currency (typically USDT) is computed via an oracle. That value then sets the borrowing capacity. Since assets obtained through margin trading are also treated as deposits, users can reach up to 5x leverage. Mango Markets does not charge any fees.

Risks

Negative equity accounts and socialization of losses

If a user’s collateral price drops quickly enough, or if the value of the borrowed tokens rises quickly enough, the account may move below a 100% collateral ratio before a liquidator steps in. In that scenario, liquidity is taken from lending pools to bring the account back to a 101% collateral ratio. Any resulting losses are shared among all lenders, which can lead to a liquidation chain reaction if many lenders are also nearing liquidation.

Oracle error

The Solana Flux Aggregator is also new on Solana and could contain code errors. The centralized exchanges supplying the reference price can also be wrong. Because every oracle publisher is relying on the same centralized exchanges, any price mistakes would impact them all. This situation could cause incorrect liquidations.

Illiquid deposits

There is a possibility that users cannot withdraw deposits because those deposits are tied up as borrowed collateral. This could be problematic for someone who needs liquidity right away. A similar issue applies to deposited positions that are lent out-if utilization reaches 100%, the user may not be able to close the position. The protocol, however, states a 100% APY while the user waits until withdrawals are possible.

Smart contract exploit

The code has been reviewed by volunteers, but there has not been a formal audit. Even though bounties exist for responsible disclosure of potential weaknesses, there is no assurance that attackers will select the bounty rather than carrying out a profitable exploit.

Perpetual Futures (WIP)

Highlights