Sorry @VTC!
This is a bit unclear for me, can you offer an example?
Say a user deposits 10 btc. They can create 10 unmatched bets of 10 btc each for a total of 100btc in market liquidity, right?
right.
Are you saying that after the first 10 btc gets matched, the other 90 btc won't get canceled?
yes.
And if another user tries to bet against those remaining 90btc will the system allow a match putting the original user into a negative balance plus 0.1mBTC fee?
no, the system won't allow a match. The offer will be cancelled and the penalty deducted from the account.
With the 90 btc in the given example not being auto canceled, won't this effect other users who see these bets as on the books as providing liquidity, yet they can't bet against it?
What is the purpose of the penalty, is it to deter users from providing liquidity, or to fund supports time as a manual review/operation has to be done?
Technically users can set up a 24/7 system to self monitor and cancel bets over there balance via api, but that is much more work then fairlay doing it on their side by default (with perhaps an option to opt out, for liquidity providers who plan to add more balance and don't want bets canceled)
Your system is able to monitor and impose a penalty (and I'm assuming avoid any race condition bugs/exploits) yet it can't be set up to auto cancel these bets instead?