📡Solver Network Explained

Solvers, or market makers, are the backbone of the Carbon platform. They ensure trades are executed smoothly, securely, and at competitive prices. While their role is complex, it is pivotal to how Carbon delivers deep liquidity from both crypto and TradFi markets on-chain.

Below, we explain how the solver process works inside Carbon, step by step. This example shows one way a solver may operate, but the system is designed for maximum flexibility — solvers can hedge, quote, and manage risk in nearly infinite ways.

1. The Solver Deposits Collateral On- and Off-Chain

To participate, a solver begins by depositing collateral both on-chain and off-chain:

• On-Chain: A portion of the solver’s collateral is held in Carbon’s on-chain contracts as a guarantee for execution.

• Off-Chain: The remaining collateral is deployed at the solver’s hedging venues of choice, which may include centralized exchanges, OTC desks, TradFi brokers, or other venues.

This structure gives solvers the ability to execute trades on behalf of Carbon users while keeping on-chain settlement secure and transparent.

2. The Solver Configures Their Market Making Infrastructure

Once collateral is placed, the solver sets up their market-making software. This infrastructure must be able to:

• Query and execute trades at off-chain hedging venues

• Interact with Carbon’s on-chain execution engine contracts

• Stream quotes to Carbon’s front-end via APIs and WebSockets

3. Solvers Stream Pricing Data to Carbon

Solvers continuously source pricing data from their chosen hedging venues. They then stream live quotes to the Carbon front-end with their desired spread (for example, +/– X bps vs. the off-chain order book). This constant loop of sensing and quoting ensures Carbon users always see real-time, competitive pricing.

4. A Trader Inputs Intent and Accepts a Quote

From the Carbon WebApp or Telegram Bot, a trader inputs their trade intent — size, order type, leverage, and asset. Solvers compete to quote the best price.

Carbon’s proprietary matching system ensures the best available quote per the trader’s intent. If the trader accepts, they sign a “request for trade” and deposit their required margin into Carbon’s on-chain execution engine.

5. The Solver Executes and Opens the Trade

Once the request for trade is submitted, the solver receives it and executes the hedge off-chain (if they choose to remain delta-neutral) before filling the on-chain position.

The solver then deposits their own required margin into the on-chain perpetual contract. The position is now open.

Note: Solvers are not required to hedge. They may choose to take directional risk or hedge using other methods such as spot positions. This example simply illustrates one possible approach.

6. Both Parties Monitor Margin, Rebalance, or Close

Both trader and solver are responsible for maintaining their margin:

• Traders: Must monitor and rebalance their on-chain cross-margin account or risk liquidation. They may also request to close their position at any time, settling PnL back into their account.

• Solvers: Must maintain margin both on- and off-chain. If the trader requests to close, the solver can preemptively close their off-chain hedge, then accept the on-chain close request.

Third-party liquidators monitor all open positions using oracle price feeds. If margin falls below requirements, either party can be liquidated.

On-Chain and Off-Chain Orchestration

Carbon’s solver architecture brings true hybrid execution to DeFi. The intent-based system allows:

For Traders:

• Optimal price execution by accessing off-chain liquidity on-chain

• A streamlined RFQ process with fill times under five seconds

• Exposure to crypto and TradFi derivatives products that may not exist natively on-chain

• Permissionless, self-custodial, and trustless on-chain settlement

• Large orders filled by multiple solvers acting as liquidity aggregators

For Solvers:

• Ability to maintain delta-neutral positions with proactive hedging

• Freedom to source liquidity from any venue — CEX, DEX, OTC, TradFi brokers, CME options, etc.

• Advanced infrastructure such as netting (future product) to offset exposures between solvers at low or zero cost

Why It Matters

Carbon’s solver network is open and flexible by design. It provides both traders and solvers with the tools to execute derivatives trades as efficiently as possible, blending CEX-like performance with DEX security and transparency.

This hybrid model is what powers Carbon’s vision as The Everything Perp DEX — bringing real liquidity, real TradFi access, and on-chain settlement into one seamless platform.