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Capped Markets are CreditToken markets where every point minted is backed 1:1 by USD collateral, up to a fixed price cap. This removes counterparty and shortfall risk from the market: settlement is always fully funded, regardless of how the underlying token performs at TGE. Our first Capped Market is for Variational’s $VAR points.

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Why Capped Markets vs. OTC

  • No SAFE or multisig setup. OTC points trades typically require both sides to set up a custom multisig and confirm wallet addresses before a deal can begin. On ArcX, you trade directly, no setup required.
  • No counterparty coordination. OTC settlement depends on a specific buyer and seller pair completing every step together. On ArcX, the market itself is the counterparty.
  • Lower fees. 0.25% for makers, 0.75% for takers, versus the 1.5% typically charged on OTC points trades.
  • Full exit liquidity before TGE. OTC positions are generally locked until settlement. On ArcX, you can buy or sell your position at any time before TGE.

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How Collateral Works

Each point minted in a Capped Market is backed by collateral equal to the market’s price cap. Collateral is locked in a smart contract for that market. For example, you can view the collateral contract for a Variational capped market on chain here. To mint additional points, additional collateral is deposited at the same ratio. The collateral ratio is fixed for the life of a given market and does not change after launch.

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Permissionless Minting

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Mint

To mint one point, lock USDC collateral equal to the market’s maximum price cap. You receive the minted point and can either burn it to reclaim your collateral or sell it on the market at your chosen price. Once your sell order matches, you receive USDC in your wallet. Locked collateral can only be released through settlement following TGE, as described below, or by burning points up to the amount you have minted in that market.

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Burn

You can burn points at any time before settlement to reclaim the corresponding locked collateral. The total number of points you burn cannot exceed the number you have minted in that market. For example, if you mint five points, sell them, then buy back five points, you can burn all five. You can also burn fewer at a time, up to your total minted amount.

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Settlement

Settlement is paid in USDC. To determine the value of a point, we calculate the number of tokens received per point at TGE and multiply it by the token’s time-weighted average price (TWAP) in USDC over the first 30 minutes after TGE. The settlement price per point is the lower of this value and the market’s cap. For example, with a cap of 100 USDC per point:
  • Value at or above the cap. Each point holder receives the full 100 USDC per point, and minters receive nothing from the collateral.
  • Value below the cap. If the tokens per point multiplied by the token’s TWAP gives a value of 70 USDC per point, holders receive 70 USDC per point and minters can redeem the remaining 30 USDC per point.
Payouts are claimable on the site and never exceed the fixed cap per point.
If you purchased your points before September 29 and would prefer to receive Variational tokens themselves, please create a ticket on Discord.

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Vesting

Vesting does not affect settlement. The full allocation settles in USDC on the TGE date, using the price per point calculated from the token’s first 30-minute TWAP and subject to the market’s cap, as described above. Settlement does not wait for individual tranches to unlock.

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Trading

Points in a Capped Market trade like any other CreditToken, on the ArcX orderbook against USDC, with standard maker and taker fees. Holders can buy or sell at any time before settlement. There is no lock-up and no counterparty coordination required. See Trading CreditTokens for order types.