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How It Works

Ballast Markets provides a complete trading workflow for chokepoint and port risk derivatives. Here's how you trade from onboarding to settlement.

3-Step Trading Process​

1. Onboard & Deposit Collateral​

Institutional Onboarding:

  • Submit KYC/AML documentation
  • Sign master trading agreement
  • Receive API credentials and wallet address

Deposit Collateral:

  • Transfer USDC (stablecoin) to your Ballast wallet
  • Minimum: $5,000 for individual accounts
  • Minimum: $50,000 for market maker accounts
  • Collateral is held in segregated smart contracts (fully auditable)

Security:

  • Multi-sig custody (3-of-5 threshold)
  • Insurance fund covers protocol-level risks
  • Real-time proof-of-reserves

2. Trade Markets via API or UI​

Access Methods:

  1. Web App: Visual trading interface (launch Q2 2025)
  2. REST API: Place orders, manage positions
  3. WebSocket: Real-time market data and order updates

Order Types:

  • Limit orders (maker)
  • Market orders (taker)
  • Stop-loss orders
  • Iceberg orders (for large sizes)

Example Trade:

Market: Suez Canal Availability - April 2025
Position: Buy 1,000 contracts at 0.85 (expecting availability)
Notional: $1,000 × 0.85 = $850
Required Collateral: $100 (10x leverage)
P&L at Settlement:

  • If Suez stays open (settles to 1.00): +$150 profit
  • If Suez closes (settles to 0.00): -$850 loss (liquidated before full loss)

3. Settlement & P&L Realization​

Settlement Timeline:

  • Contract Expiry: 23:59 UTC on last day of period
  • Data Collection: 24-hour window for AIS/port data aggregation
  • Preliminary Settlement: Published 24 hours post-expiry
  • Dispute Window: 48 hours for contested settlements
  • Final Settlement: Published 72 hours post-expiry

Settlement Sources:

  • Binary markets: AIS data + official announcements
  • Index markets: Port authority data (wait times, anchorage counts)
  • Volatility markets: Historical AIS standard deviations

Payout:

  • Winners receive USDC directly to wallet
  • Automatic collateral release after settlement
  • Tax reporting (Form 1099 for US traders)

Example Use Cases​

Use Case 1: Energy Desk Hedging Hormuz Risk​

Scenario:
An oil trading desk holds 500k barrels of crude for Q2 delivery through Hormuz. They're exposed to closure risk that could spike Brent by $10-20/bbl.

Hedge:

  • Buy 10,000 Hormuz Binary contracts (strike: "Fully Operational")
  • Entry price: 0.90 (market expects 90% probability of no disruption)
  • Notional: $10,000 × 0.90 = $9,000

Outcome:

  • If Hormuz stays open: Lose $1,000 on hedge (settles at 1.00), but crude delivery proceeds normally
  • If Hormuz closes: Gain $9,000 on hedge (settles at 0.00), offsetting losses from delayed/rerouted shipments

Why not just trade Brent futures?
Brent reacts 2-3 days after a Hormuz incident. Ballast settles on flow disruption directly, locking in hedge before price moves.

Use Case 2: Retailer Hedging Shanghai Port Congestion​

Scenario:
A US retailer has $5M of inventory due to ship from Shanghai in June. If port congestion spikes, they miss Q3 sales.

Hedge:

  • Buy Shanghai Congestion Index contracts (June 2025)
  • Entry: Index at 60 (moderate congestion)
  • Notional: $500 per index point × 10 contracts = $5,000 per point move

Outcome:

  • If congestion drops to 40: Lose $10,000 on hedge, but goods arrive on time
  • If congestion spikes to 80: Gain $10,000 on hedge, offsetting demurrage/expedited shipping costs

Use Case 3: Market Maker Providing Liquidity​

Scenario:
A prop shop provides liquidity on Panama Canal congestion markets.

Strategy:

  • Quote bid/ask spreads (e.g., 64/66 on index)
  • Earn spread on every trade (2 points per round-trip)
  • Hedge delta with freight derivatives or container futures

Economics:

  • Average 100 trades/day × 2 point spread = 200 points profit
  • $500 notional per point = $100,000 daily revenue
  • Requires $5M+ collateral for position limits

Risk Management​

Position Limits​

  • Based on Open Interest (OI) per market
  • Individual limit: 5% of OI
  • Market maker limit: 20% of OI

Margin Requirements​

  • Initial margin: 10-20% of notional (varies by leverage tier)
  • Maintenance margin: 5% of notional
  • Forced liquidation at 80% margin usage

Circuit Breakers​

  • Trading halts if price moves >15% in 10 minutes
  • Resumes after 5-minute cooling period
  • Prevents flash crashes from fat-finger orders

Technical Infrastructure​

Latency​

  • Order matching: <10ms (co-located)
  • WebSocket updates: <50ms globally
  • Settlement computation: <1 hour post-expiry

Uptime​

  • 99.9% SLA (excludes scheduled maintenance)
  • Hot failover across 3 geographic regions
  • DDoS protection via Cloudflare

Transparency​

  • Open-source settlement contracts (Ethereum L2)
  • Real-time proof-of-reserves dashboard
  • Audited by Trail of Bits (security) and PwC (financials)

Getting Started​

  1. Join Waitlist: https://ballastmarkets.com/waitlist
  2. Review API Docs: REST API | WebSocket
  3. Test on Sandbox: Coming Q2 2025 (paper trading environment)

Questions? Email hello@ballastmarkets.com