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Perpetual Futures
Overview
Architecture
Margin System
User deposits collateral which opens the margin account
Two health factors are present: 1. The first related to Initial Margin; 2. The other related to Maintenance Margin.
If the user has multiple positions then initial margin is the sum of all IMs of all positions and MM is the sum of MMs of all positions
To open a new order the user must have collateral > Initial margin of the position (i.e. IM_HF (Initial Margin Health Factor) > 1)
If the Initial margin becomes greater than the collateral deposited no more orders can be opened (IM_HF < 1)
If Maintenance Margin becomes less than 0.8 (0.8 just as an example) the user can be liquidated (Maintenance Margin Health Factor (MM_HF) < 1)
Liquidation penalty here is 0.2 -> will be shared by liquidators and the insurance fund
For short Calls:
IM = Maximum (0.15 - OTM Amount/Underlying Mark Price, 0.1) + Mark Price of the Option MM = 0.075 + Mark Price of the Option
For short Puts:
IM = Maximum (Maximum (0.15 - OTM Amount/Underlying Mark Price, 0.1) + Mark Price of the Option, Maintenance Margin) MM = Maximum (0.075, 0.075 * Mark Price of the Option) + Mark Price of the Option
Workflow
Liquidation & Insurance Fund
Assistant
Responses are generated using AI and may contain mistakes.