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General

The Open Nile Protocol enables EUR/USD non-deliverable forward (NDF) trading onchain. Traders take long or short positions on future EUR/USD exchange rates with fixed maturity dates (tenors). The protocol is a zero-sum system: trader profit equals pool loss, and vice versa. An ERC-4626 liquidity pool acts as the counterparty to all trades, earning fees and liquidation penalties in return.
The protocol is currently deployed on Ethereum Sepolia testnet only. This is experimental software and should not be used with real funds. Mainnet deployment is planned for the M3 (Mainnet Ready) milestone, following professional audits and formal verification.
The protocol uses USDC (6 decimals) as its sole collateral token. On Sepolia (M2), the protocol uses a MockUSDC token for testing purposes. Production deployment (M3) will use canonical USDC on mainnet.

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Trading

Three tenors are available for trading:
TenorDuration
1 Day24 hours
1 Week7 days
1 Month30 days
A 60-second test tenor is also available in local development environments for rapid testing.
The minimum position size is 100 USDC (100,000,000 raw units with 6 decimals). This parameter is configurable by the protocol admin via the Config contract and may be adjusted in future deployments.
PnL is calculated based on the difference between the current forward price and your entry price:
  • LONG position: PnL = notional * (currentPrice - entryPrice) / 1e18
  • SHORT position: PnL = notional * (entryPrice - currentPrice) / 1e18
Your entry price is locked at the time the position is opened and does not change. PnL is unrealized until the position is closed or settled at maturity.
Yes. If your position equity (margin + unrealized PnL) falls below the maintenance margin (MM) threshold, your position becomes liquidatable. Any keeper can trigger the liquidation, and a liquidation penalty is applied. The penalty is deducted from your remaining margin and accrues to the liquidity pool.
Monitor your position equity and add margin before it approaches the maintenance margin level to avoid liquidation.

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Liquidity Providers

The liquidity pool is implemented as an ERC-4626 vault:
  1. Deposit USDC into the vault and receive share tokens in return
  2. Share tokens represent your proportional ownership of the pool
  3. Share price reflects pool performance — it increases when the pool earns trading fees and liquidation penalties, and decreases when traders are net profitable
  4. Withdraw by redeeming shares for USDC at the current share price
Withdrawals are subject to utilization limits — if the pool’s capital is heavily utilized by open positions, some liquidity may be temporarily locked.
The pool is the counterparty to all trader positions. Key risks include:
  • Directional risk — If traders are net profitable over a period, the pool (and LP share value) decreases
  • Utilization risk — High utilization may temporarily prevent withdrawals
  • Smart contract risk — As with any DeFi protocol, there is inherent risk in the smart contract code
However, the pool benefits from:
  • Trading fees collected on every position open and close
  • Liquidation penalties seized from underwater positions
  • Diversification — many positions in different directions tend to offset each other
The protocol is currently on testnet only. Do not provide liquidity with real funds until mainnet launch.

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Why?

EUR/USD is the world’s most traded currency pair — over $1 trillion in daily spot volume with the deepest oracle support from Pyth Network. It also has the clearest demand: crypto-native companies with European operations, EUR-denominated invoices, and non-USD treasury needs. Starting with the most liquid, best-supported pair minimizes oracle risk while serving the largest user base.
Perpetual funding rates average ~11% annualized and fluctuate unpredictably with market demand. A 1-month EUR/USD hedge via perps costs roughly $917 per $100K notional in funding alone. The same hedge with a Nile Markets forward costs $50 (0.05% trading fee). Forwards also settle on a specific date, which matches how real-world FX obligations (payroll, invoices) work. See Forwards vs Perpetuals for a detailed comparison.
Risk containment. In cross margin, a single bad trade can drain your entire account. With isolated margin, each position’s risk is capped at its own locked margin. Your other positions and free collateral are completely unaffected by any single liquidation. This is safer for both traders (no cascading losses) and the protocol (clearer risk boundaries).
The pool-as-counterparty model eliminates the need for order matching. Any trader can open a position at any time, as long as pool capacity allows. There is no waiting for a counterparty, no order book spread, and no liquidity fragmentation across price levels. LPs earn fees as compensation for bearing the directional risk that traders create.
Anyone can deposit USDC into the protocol’s ERC-4626 vault and become a liquidity provider. LPs earn 70% of all trading fees (0.05% per trade) and liquidation penalties (0.30% per liquidation). In return, they bear the counterparty risk of all open trader positions. See LP Risk & Reward for scenario analysis.

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Technical

All protocol contracts are immutable — once deployed, the contract code cannot be changed. This is a deliberate security choice that eliminates an entire class of upgrade-related risks (malicious upgrades, storage collisions, governance attacks on proxy admin).Protocol parameters (fee rates, margin requirements, risk caps, etc.) are configurable via the Config contract by the admin, but the logic itself is fixed.If contract logic changes are needed, a full redeployment is required with migration of state. This tradeoff favors security and auditability over upgrade convenience.