> For the complete documentation index, see [llms.txt](https://learn.trovemarkets.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://learn.trovemarkets.com/trove-x-polymarkets/keeping-prices-bounded-0-1.md).

# Keeping Prices Bounded (0-1)

A perpetual market can *trade* at any price if someone places an order there.

So it’s important to distinguish between:

* **Trade price:** what someone can place on the orderbook (not strictly bounded by protocol)
* **Mark / Index price:** what drives funding, margin, and settlement mechanics (controllable via HIP-3 oracle ops)

Trove’s goal is:

> Keep the **mark/index** price meaningfully bounded within `[0, 1]` so the market behaves like a probability.

***

### What HIP-3 lets a deployer control

HIP-3 deployers can update:

* `oraclePxs` (oracle/index input)
* `markPxs` (mark updates)
* `externalPerpPxs` (external reference used to prevent sudden mark deviations)

These are submitted via the HIP-3 `setOracle` action.

Important operational constraints include:

* calls must be spaced by at least \~2.5 seconds
* deployers are expected to update roughly every \~3 seconds even if no changes
* mark updates are rate-limited/clamped (e.g., 1% step clamps)

***

### Approach for probability markets on HIP-3

#### Step 1: Keep oracle/index bounded

Define:

* `oraclePx = clamp(p_ref, 0, 1)`

This ensures the “fundamental” reference is always within `[0, 1]`.

#### Step 2: Force mark updates to stay bounded (even if local trading deviates)

Hyperliquid updates mark price using the **median** of:

* deployer-provided mark price inputs, and
* the local mark price (derived from best bid/ask/last trade)

To keep the median bounded, provide **two bounded mark price inputs**:

* `mark_source_1 = clamp(p_ref, 0, 1)`
* `mark_source_2 = clamp(EMA(p_ref), 0, 1)`

With two bounded values and one local value:

* even if local mark prints above 1, the median remains ≤ 1
* even if local mark prints below 0, the median remains ≥ 0

#### Step 3: Bound the external reference

Set:

* `externalPerpPx = clamp(EMA(p_ref), 0, 1)`

This helps limit sudden deviations and keeps the system anchored.

***

### What this does and does not guarantee

#### Guarantees (what Trove can make true)

* **oracle/index inputs** remain within `[0, 1]`
* **deployer mark inputs** remain within `[0, 1]`
* the resulting **mark** is strongly biased to remain within `[0, 1]`

#### Non-guarantees (protocol reality)

* Someone can still place a limit order at 1.20 and match it if a counterparty accepts.
* Trove can prevent this **in Trove UI**, but cannot stop all third-party API usage.

***

### UI guardrails (recommended)

To preserve probability semantics for users:

* Trove UI should restrict order price input to `[0, 1]`
* UI should display price as `0% – 100%`
* UI should clearly label this as a “probability-style perp” with bounded mark/index

***

### Risk parameters

* Conservative **max leverage** and margin tables for binary markets
* Tight **open interest caps** while liquidity is bootstrapping
* Funding multipliers calibrated so prolonged divergence becomes expensive


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