Abstract
Torque is a decentralized derivatives protocol that brings deep, capital-efficient perpetual futures markets to tokenized real-world assets (RWAs). By building natively on Robinhood Chain — a high-performance execution layer purpose-built for tokenized equities, indices, and commodities — Torque unifies the price discovery of traditional markets with the composability and self-custody of decentralized finance. This paper describes the protocol's market structure, hybrid matching architecture, cross-margin risk engine, oracle design, liquidation mechanics, and the $TORQ token that governs and secures the system.
1. Introduction
Derivatives account for the majority of global trading volume, yet on-chain derivatives remain constrained by fragmented liquidity, slow settlement, and limited access to real-world underlyings. Meanwhile, the tokenization of equities and other RWAs is accelerating, but secondary markets for these assets are largely spot-only and siloed.
Torque addresses this gap. It provides perpetual futures — contracts without an expiry that track a spot index via a funding mechanism — on tokenized stocks, indices, commodities, and crypto. The protocol is designed for three constituencies: retail traders seeking leveraged exposure with self-custody, market makers requiring low-latency execution, and institutions demanding verifiable settlement and risk transparency.
2. Market Structure
Each Torque market is a perpetual contract quoted in USDC. Markets are parameterized by an initial margin fraction, a maintenance margin fraction, a maximum leverage cap, and a funding interval. Tokenized-equity markets follow the trading calendar of their underlying, with funding and mark pricing widening spreads during closed sessions to reflect reduced liquidity.
2.1 Funding Rate
The funding rate keeps the perpetual price anchored to the underlying index. It is computed each interval from the time-weighted premium of the perpetual mark over the index price, clamped to a per-interval bound. Longs pay shorts when the perpetual trades at a premium, and shorts pay longs when it trades at a discount.
funding = clamp( TWAP( (mark − index) / index ), −k, +k ) + interest
3. Protocol Architecture
Torque uses a hybrid design: a high-throughput off-chain matching engine paired with on-chain settlement and custody on Robinhood Chain. Orders are matched off-chain for sub-second latency, while every fill, margin change, and liquidation is committed to the chain, where collateral is held in non-custodial vault contracts.
3.1 Settlement Layer
All balances live in audited smart contracts. The matching engine can never move user funds; it can only produce signed fills that the settlement contracts validate against on-chain margin. This preserves CEX-grade performance without surrendering custody.
3.2 Composability
Because settlement occurs on Robinhood Chain, positions and collateral receipts are composable with the broader tokenized-asset ecosystem — enabling structured products, vault strategies, and cross-margin against tokenized treasuries.
4. Risk & Margin Engine
Torque supports both cross-margin and isolated-margin accounts. The risk engine continuously evaluates account health as the ratio of equity to maintenance margin across all open positions. When health falls below one, the account becomes eligible for liquidation.
4.1 Liquidations
Liquidations are handled by a partial-liquidation mechanism that reduces position size only enough to restore account health, minimizing trader losses. Keepers are incentivized with a liquidation fee, and any residual bad debt is absorbed by the insurance fund before socialization is ever considered.
4.2 Insurance Fund
A protocol-owned insurance fund, seeded at launch and replenished by a share of trading and liquidation fees, backstops the system against gap risk. Its balance and flows are fully on-chain and auditable in real time.
5. Oracle Design
Reliable pricing is the foundation of a derivatives exchange. Torque aggregates multiple independent price sources for each underlying, discards outliers, and applies a time-weighted average to produce the index price. Mark pricing combines the index with the order book's impact prices to resist manipulation. Circuit breakers pause a market when price movement or oracle divergence exceeds configured thresholds.
6. The $TORQ Token
$TORQ is the native governance and utility token of the protocol. It aligns long-term stakeholders — traders, liquidity providers, and keepers — with the health of the exchange.
6.1 Utility
Staked $TORQ earns a share of protocol fees, unlocks fee-tier discounts, and secures the insurance backstop. Stakers who provide backstop capital receive elevated rewards in exchange for junior loss absorption.
6.2 Governance
Token holders govern market listings, risk parameters, fee schedules, and treasury allocation through a time-locked, on-chain governance process. The full distribution and emissions schedule is detailed in Section 6.1 above.
7. Roadmap
The protocol will roll out in phases: mainnet launch with tokenized-equity and crypto perpetuals, followed by cross-margin against tokenized treasuries, permissionless market creation, and a fully decentralized matching layer.
8. Legal Disclaimer
This document is for informational purposes only and does not constitute an offer to sell, a solicitation to buy, or a recommendation for any security or financial instrument. Trading leveraged derivatives carries substantial risk of loss. Nothing herein is financial, legal, or tax advice. $TORQ is a utility token and is not offered where prohibited by law.