Permissioned markets about openbook-v2 HOT 2 CLOSED

I am at Civic and worked with Armani on the initial implementation of Permissioned Markets in Serum. Here is a little background on the use-case for this feature

Markets may have constraints on who can place orders. For example, they may disallow traders in OFAC-sanctioned countries, or they may simply require traders to be whitelisted or KYCed.

This is a real possibility e.g. with MiCA regulations coming in next year in Europe that essentially requires KYC even for non-custodial wallets. Dexes that don't allow for these constraints may not be usable by institutional traders, banks etc.

We don't want to add anything like KYC into the dex itself, and we don't want to tie Openbook to any one implementation of these regulations on chain, but the dex should probably have a way to create markets that comply with them (and upcoming regulations).

The way Armani built this in Serum, was to abstract it into a Permissioned Markets proxy. Markets could be set up with a key that would have to cosign orders. This cosigner would typically be a PDA owned by a proxy, and traders would place orders via the proxy.

An important component is order-book "pruning" - permission to trade can also be removed, and in doing so, existing orders must also be removed. If, for example, a wallet makes an order, then that wallet shows up on some OFAC sanctions list, then traders filling that order would be in violation of US law and be liable to be prosecuted. The permissioned-markets proxy also had a prune function which would remove orders from the order-book for that wallet. Pruning was a permissionless crank operation.

The civic implementation of the proxy used a soulbound token (Civic Pass) to determine the right to trade. So the proxy checked for existence of a valid pass and pruned the order book if it was revoked.

Feel free to reach out if more details are needed about this feature. Anecdotally, we are speaking to interested parties quite frequently these days as people see regulations getting closer, who are interested in setting up permissioned markets using OpenBook (as well as other dexes on other chains).

from openbook-v2.

Thank you for creating this issue.
Closing this issue as permissioned markets have been implemented according to your specifications.
In case there is something that doesn't meet the requirements a different specific issue can be open

from openbook-v2.