Leverage and risk
Margin, market capacity, liquidation resources and insurance are managed as separate constraints.
Capacity follows capital#
An account can meet its margin requirement while the market lacks capacity for more exposure. Vaults reserve capital for trader profits, price gaps and settlement obligations. Separate limits govern gross open interest, directional skew, concentration and aggregate liabilities.
Market-specific leverage and position limits belong in published risk parameters after qualification. The website doesn't prescribe final limits or turn treasury balances into a leverage guarantee.
Prices and funding#
The pricing policy requires authenticated sources, freshness and confidence limits, plus an independent reasonableness check. Redundant endpoints backed by the same underlying feed don't constitute independent price sources.
Funding responds to imbalance under a published calculation and rate cap. The treatment of vault inventory and reserved funding liabilities must reconcile with trader balances and settlement.
Liquidation and insurance#
Liquidation reduces risk before equity is exhausted, allowing for maintenance margin, execution costs and price gaps. Redundant risk services need authority to reduce positions without authority to withdraw collateral.
Insurance covers specified deficits after applicable margin and market-loss rules. It isn't unlimited protection against profitable traders or vault losses. LP exposure, emergency settlement and extraordinary loss allocation require clear terms.
Risk controls and distributions#
Stale prices stop new risk. Capital or settlement constraints reduce available capacity or move a market into close-only operation. Required reserve replenishment and recognized losses take precedence over discretionary token purchases and distributions.
Trader margin, vault capital, insurance and reward escrow remain separately accounted for. The same USDC can't back a position, insure it and fund a holder payout simultaneously.