Parcl v2 is a noncustodial automated market maker (”AMM”) designed for perpetual synthetic assets that cannot otherwise support liquid trading markets. For example, markets where participants get exposure to statistically computed values such as aggregate real estate prices or macroeconomic measures. Parcl v2 employs a novel architecture that offers solvency, zero credit risk, capital efficiency, and price execution at oracle prices.


Parcl v2 borrows from both traditional AMMs and synthetic asset protocols to produce an efficient and simple synthetic asset AMM. The term “automated market maker” typically refers to exchange smart contract protocols that use mathematical functions for price discovery. The term “synthetic asset protocol” typically refers to smart contract protocols that collateralize synthetic exposure, use oracles for an underlying price, and use on-chain mechanisms to enforce or promote settlement at the underlying price.

Key Features


Pools are isolated trading markets in which traders can get long or short exposure to a price feed. A pool has a single collateral stablecoin and a single price feed. Both are set once at pool creation. LPs provide liquidity on a per pool basis as each pool is an isolated market. Each pool has three token vaults for storing collateral, trader liquidity tokens, and protocol fees.

Accounting Model

Each Parcl v2 pool uses a unique liquidity token to account for pool ownership as well as position PnL accounting. All closed positions are paid out in liquidity tokens, which means that all traders become implicit LPs at position open and become explicit LPs at position close. This is the mechanism that forces solvency because traders are not paid out dollar for dollar in collateral. The exchange rate for adding and removing liquidity is the ratio of the total collateral in the pool to total liquidity tokens outstanding.

$$ R_{liquidity} = \frac{Collateral_{pool}}{Liquidity_{supply}} $$

The liquidity token exchange rate most materially changes as traders close positions. During a close position transaction, the protocol mints or burns liquidity tokens in direct proportion to the position’s profit or loss at the current liquidity token exchange rate. PnL is comprised of leveraged price movement and funding.

Trader PnL