> ## Documentation Index
> Fetch the complete documentation index at: https://docs.b1nary.app/llms.txt
> Use this file to discover all available pages before exploring further.

# Risk Controls

> Circuit breakers, quote deadlines, and exposure management.

## Circuit breaker

b1nary runs a circuit breaker that monitors ETH/USD via Chainlink every 10 seconds. If ETH moves more than 2% from a reference price:

* `GET /prices` returns 503 (users can't see quotes)
* The protocol's own MM nonce is incremented (quotes invalidated)

You should also implement your own circuit breaker. Call `incrementMakerNonce()` on BatchSettler to instantly invalidate all your outstanding quotes:

```python theme={null}
settler.functions.incrementMakerNonce().transact({"from": YOUR_ADDRESS})
```

## Quote deadlines

Set short deadlines (e.g., 5 minutes). This limits the time window where a stale quote can be filled against you.

```python theme={null}
"deadline": int(time.time()) + 300  # 5 minutes
```

## Max amount

Set `maxAmount` per quote to limit your exposure per option. Start small (1 ETH notional = `100000000` in 8 decimals) and increase as you gain confidence.

## Per-quote cancellation

Cancel specific quotes without invalidating everything:

```python theme={null}
# On-chain: cancel by quote hash
quote_hash = settler.functions.hashQuote(quote_struct).call()
settler.functions.cancelQuote(quote_hash).transact({"from": YOUR_ADDRESS})

# Off-chain: cancel all quotes in the API
requests.delete(f"{API}/mm/quotes", headers=HEADERS)
```

## Settlement

Options expire weekly at **08:00 UTC**. Settlement is automatic. You do not need to do anything on-chain.

### OTM (out-of-the-money)

The user's collateral is returned. Your oTokens expire worthless. Your cost was the premium you paid. If you hedged correctly, the hedge roughly broke even.

### ITM (in-the-money)

Physical delivery occurs. The operator redeems your oTokens for the user's collateral, swaps it via Uniswap to deliver the contra-asset.

| Option | User locked | User receives (ITM)  |
| ------ | ----------- | -------------------- |
| PUT    | USDC        | ETH at strike price  |
| CALL   | WETH        | USDC at strike price |

Your net P\&L: `premium_paid - intrinsic_value + hedge_pnl`. If you hedged delta correctly, the hedge P\&L offsets the intrinsic value.

**At expiry:** close your hedge position on your external venue. The b1nary side is handled automatically.

## FAQ

<AccordionGroup>
  <Accordion title="Do I need to run a node?">
    No. Use any Base RPC. Public endpoints: `https://mainnet.base.org` (production) or `https://sepolia.base.org` (testnet).
  </Accordion>

  <Accordion title="How often should I refresh quotes?">
    Our reference MM refreshes every 60 seconds. Faster is better for tighter spreads.
  </Accordion>

  <Accordion title="Can my quotes be partially filled?">
    Yes. A single quote can be filled across multiple `executeOrder` calls until `maxAmount` is reached.
  </Accordion>

  <Accordion title="What if I don't hedge?">
    You take directional risk. If you're bullish ETH and selling puts, not hedging can be profitable. But you're speculating with an edge, not market-making.
  </Accordion>

  <Accordion title="What happens if the circuit breaker triggers?">
    `GET /prices` returns 503. Users can't fill quotes through the API. Your existing signed quotes remain valid on-chain until the deadline passes or you call `incrementMakerNonce()`.
  </Accordion>

  <Accordion title="Do I pay gas?">
    No. Users pay gas to execute orders. You only pay gas for: approving USDC (once), incrementing nonce (rare), and cancelling quotes on-chain (optional).
  </Accordion>

  <Accordion title="What's the protocol fee?">
    4% (400 bps) of gross premium. Deducted automatically. If you bid 5 USDC, the user receives 4.80 USDC and the protocol takes 0.20 USDC.
  </Accordion>

  <Accordion title="Can multiple MMs compete?">
    Yes. `GET /prices` shows the best bid across all MMs. If another MM bids higher, their quote is shown to users.
  </Accordion>
</AccordionGroup>