Market Types Drift Protocol supports two primary market types, each with distinct characteristics and use cases.
export class MarketType { static readonly SPOT = { spot: {} }; static readonly PERP = { perp: {} }; }
Perpetual Markets Perpetual futures are derivative contracts that track the price of an underlying asset without an expiration date.
Perpetual Market Account Each perp market maintains extensive state:
export type PerpMarketAccount = { status : MarketStatus ; contractType : ContractType ; contractTier : ContractTier ; expiryTs : BN ; expiryPrice : BN ; marketIndex : number ; pubkey : PublicKey ; name : number []; amm : AMM ; numberOfUsersWithBase : number ; numberOfUsers : number ; marginRatioInitial : number ; // Initial margin requirement marginRatioMaintenance : number ; // Maintenance margin requirement nextFillRecordId : BN ; nextFundingRateRecordId : BN ; nextCurveRecordId : BN ; pnlPool : PoolBalance ; liquidatorFee : number ; ifLiquidationFee : number ; imfFactor : number ; // Initial margin fraction factor unrealizedPnlImfFactor : number ; unrealizedPnlMaxImbalance : BN ; unrealizedPnlInitialAssetWeight : number ; unrealizedPnlMaintenanceAssetWeight : number ; // ... additional fields };
Contract Types Drift supports multiple contract types:
export class ContractType { static readonly PERPETUAL = { perpetual: {} }; // Standard perpetuals static readonly FUTURE = { future: {} }; // Expiring futures static readonly PREDICTION = { prediction: {} }; // Binary outcome markets }
Perpetual contracts are the most common and have no expiration. Future contracts settle at a specific expiry time. Prediction markets are binary contracts that settle to 0 or 1.
AMM Mechanism The AMM uses a virtual constant product market maker with dynamic repegging:
Constant Product Formula: k = b a s e R e s e r v e s × q u o t e R e s e r v e s k = baseReserves \times quoteReserves k = ba se R eser v es × q u o t e R eser v es Price Calculation: p r i c e = q u o t e R e s e r v e s b a s e R e s e r v e s × p e g M u l t i p l i e r price = \frac{quoteReserves}{baseReserves} \times pegMultiplier p r i ce = ba se R eser v es q u o t e R eser v es × p e g M u lt i pl i er The pegMultiplier is adjusted periodically to keep the AMM price close to the oracle price, using protocol fees to cover the cost of repegging.
Funding Rates Funding rates incentivize the perpetual price to track the oracle (spot) price:
Positive funding : Longs pay shorts (when mark > oracle)Negative funding : Shorts pay longs (when mark < oracle)Payment interval : Typically every hourRate calculation : Based on the gap between mark and oracle TWAPs
export type FundingRateRecord = { ts : BN ; recordId : BN ; marketIndex : number ; fundingRate : BN ; fundingRateLong : BN ; fundingRateShort : BN ; cumulativeFundingRateLong : BN ; cumulativeFundingRateShort : BN ; oraclePriceTwap : BN ; markPriceTwap : BN ; periodRevenue : BN ; baseAssetAmountWithAmm : BN ; baseAssetAmountWithUnsettledLp : BN ; };
Margin Requirements Perp markets have tiered margin requirements based on size:
Initial Margin Ratio : Required to open new positionsm a r g i n R a t i o I n i t i a l + i m f F a c t o r × s i z e × 10 marginRatioInitial + imfFactor \times \sqrt{size \times 10} ma r g in R a t i o I ni t ia l + im f F a c t or × s i ze × 10 Maintenance Margin Ratio : Required to keep positions openm a r g i n R a t i o M a i n t e n a n c e + i m f F a c t o r × s i z e × 10 marginRatioMaintenance + imfFactor \times \sqrt{size \times 10} ma r g in R a t i o M ain t e nan ce + im f F a c t or × s i ze × 10 Larger positions have higher margin requirements due to the IMF (Initial Margin Fraction) factor, which applies size-based scaling.
Spot Markets Spot markets enable trading, lending, and borrowing of assets on a cross-collateralized basis.
Spot Market Account export type SpotMarketAccount = { status : MarketStatus ; assetTier : AssetTier ; name : number []; marketIndex : number ; pubkey : PublicKey ; mint : PublicKey ; vault : PublicKey ; oracle : PublicKey ; oracleSource : OracleSource ; historicalOracleData : HistoricalOracleData ; historicalIndexData : HistoricalIndexData ; insuranceFund : { /* insurance fund config */ }; revenuePool : PoolBalance ; ifLiquidationFee : number ; decimals : number ; optimalUtilization : number ; // Target utilization rate optimalBorrowRate : number ; // Borrow rate at optimal util maxBorrowRate : number ; // Max borrow rate cumulativeDepositInterest : BN ; // Cumulative deposit APY cumulativeBorrowInterest : BN ; // Cumulative borrow APY totalSocialLoss : BN ; totalQuoteSocialLoss : BN ; depositBalance : BN ; // Total scaled deposits borrowBalance : BN ; // Total scaled borrows maxTokenDeposits : BN ; // Deposit cap initialAssetWeight : number ; // Collateral weight (initial) maintenanceAssetWeight : number ; // Collateral weight (maint) initialLiabilityWeight : number ; // Borrow weight (initial) maintenanceLiabilityWeight : number ; // Borrow weight (maint) liquidatorFee : number ; imfFactor : number ; // ... additional fields };
Asset Tiers Spot markets are categorized by asset quality:
export class AssetTier { static readonly COLLATERAL = { collateral: {} }; // Full collateral weight static readonly PROTECTED = { protected: {} }; // Protected from borrows static readonly CROSS = { cross: {} }; // Cross-margin only static readonly ISOLATED = { isolated: {} }; // Isolated only static readonly UNLISTED = { unlisted: {} }; // Not tradeable }
Interest Rate Model Spot markets use a utilization-based interest rate curve:
Utilization: u t i l i z a t i o n = t o t a l B o r r o w s t o t a l D e p o s i t s utilization = \frac{totalBorrows}{totalDeposits} u t i l i z a t i o n = t o t a l De p os i t s t o t a lB orro w s Borrow Rate (when util ≤ optimal): b o r r o w R a t e = o p t i m a l B o r r o w R a t e × u t i l i z a t i o n o p t i m a l U t i l i z a t i o n borrowRate = optimalBorrowRate \times \frac{utilization}{optimalUtilization} b orro wR a t e = o pt ima lB orro wR a t e × o pt ima l U t i l i z a t i o n u t i l i z a t i o n Borrow Rate (when util > optimal): b o r r o w R a t e = o p t i m a l B o r r o w R a t e + ( m a x B o r r o w R a t e − o p t i m a l B o r r o w R a t e ) × u t i l i z a t i o n − o p t i m a l U t i l i z a t i o n 1 − o p t i m a l U t i l i z a t i o n borrowRate = optimalBorrowRate + (maxBorrowRate - optimalBorrowRate) \times \frac{utilization - optimalUtilization}{1 - optimalUtilization} b orro wR a t e = o pt ima lB orro wR a t e + ( ma x B orro wR a t e − o pt ima lB orro wR a t e ) × 1 − o pt ima l U t i l i z a t i o n u t i l i z a t i o n − o pt ima l U t i l i z a t i o n Deposit Rate: d e p o s i t R a t e = b o r r o w R a t e × u t i l i z a t i o n × ( 1 − p r o t o c o l F e e ) depositRate = borrowRate \times utilization \times (1 - protocolFee) d e p os i tR a t e = b orro wR a t e × u t i l i z a t i o n × ( 1 − p ro t oco lF ee ) Scaled Balances Spot positions use a scaled balance system for efficient interest accrual:
export type SpotPosition = { marketIndex : number ; balanceType : SpotBalanceType ; scaledBalance : BN ; // Balance in scaled units openOrders : number ; openBids : BN ; openAsks : BN ; cumulativeDeposits : BN ; }; export class SpotBalanceType { static readonly DEPOSIT = { deposit: {} }; static readonly BORROW = { borrow: {} }; }
Token Amount Calculation: t o k e n A m o u n t = s c a l e d B a l a n c e × c u m u l a t i v e I n t e r e s t 1 0 9 tokenAmount = \frac{scaledBalance \times cumulativeInterest}{10^{9}} t o k e n A m o u n t = 1 0 9 sc a l e d B a l an ce × c u m u l a t i v e I n t eres t This allows all users’ balances to accrue interest without individual updates.
Collateral Weights Asset and liability weights determine how much collateral value each asset provides:
Initial Asset Weight (e.g., 0.8 = 80%): Collateral value for opening positionsMaintenance Asset Weight (e.g., 0.9 = 90%): Collateral value for maintaining positionsInitial Liability Weight (e.g., 1.2 = 120%): Borrow weight for opening positionsMaintenance Liability Weight (e.g., 1.1 = 110%): Borrow weight for maintaining positions
Higher quality assets (like USDC) have weights closer to 1.0, while volatile assets have more conservative weights.
Market Operations Paused Operations Both perp and spot markets support granular operation pausing:
export enum PerpOperation { UPDATE_FUNDING = 1 , AMM_FILL = 2 , FILL = 4 , SETTLE_PNL = 8 , SETTLE_PNL_WITH_POSITION = 16 , LIQUIDATION = 32 , SETTLE_REV_POOL = 64 , } export enum SpotOperation { UPDATE_CUMULATIVE_INTEREST = 1 , FILL = 2 , DEPOSIT = 4 , WITHDRAW = 8 , LIQUIDATION = 16 , }
Admins can pause specific operations while keeping other functionality active.
Market Data Historical Oracle Data Markets track oracle price history for various purposes:
export type HistoricalOracleData = { lastOraclePrice : BN ; lastOracleDelay : BN ; lastOracleConf : BN ; lastOraclePriceTwap : BN ; lastOraclePriceTwap5Min : BN ; lastOraclePriceTwapTs : BN ; };
TWAPs (Time-Weighted Average Prices) are used for funding rate calculations and as a manipulation-resistant price source.
Next Steps
Positions Learn how to manage positions in these markets
Oracles Understand oracle integrations and price feeds
Margin System Deep dive into margin calculations
Orders Explore order types and execution