> For the complete documentation index, see [llms.txt](https://docs.ithacaprotocol.io/docs/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.ithacaprotocol.io/docs/architecture/pre-match-processing/portfolio-dominance.md).

# Portfolio Dominance

## Order Consolidation

The Matching Engine optimization algorithm employs a mechanism to consolidate orders on options on the same underlying asset across types and strikes, without assumptions about an option pricing model or underlying stochastic process. 

## Protocol Asset Side ≥ Protocol Liability Side 

The protocol optimizes over how much to s[ell to Buy Orders](#user-content-fn-1)[^1] and how much to buy from Sell Orders at auction subject to the liability of the protocol not exceeding its positive payoff at all states of the world at expiry. The portfolio of bought options must 'dominate' the portfolio of sold options. 

{% hint style="info" %}
Matching is done under strict riskless conditions. The engine takes no market or credit risk.
{% endhint %}

[^1]:


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