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Cross-Margin Collateral Framework

IMPORTANT: Aevo will be introducing cross-margin collateral liquidations in order to bring more flexibility to its cross margin system. Please read the cross-margin trading rules section for more details.
Aevo's crypto options and perpetual futures are settled in USDC. On top of USDC collateral, we support a few types of collateral asset, each with their own collateral value ratio.
Asset
Liquidation Order
Collateral Ratio
Convert fee
USDC
1
100%
0.00%
USDT
2
99%
0.01%
aeUSD
3
100%
0.00%
ETH
4
90%
0.10%
WBTC
5
90%
0.10%
The value of a collateral asset in a portfolio is:
Balance * Price of asset in USDC * Collateral Ratio
Based on liquidity and market conditions, Aevo will update the collateral value ratio over time.

Cross-margin Trading Rules

When a negative USDC balance is incurred AND the negative balance threshold of 1 USDC is met, the account's collateral would be auto-converted to top up the USDC balance. The auto-conversion process goes through the list of assets based on their liquidation order to convert into USDC.
There are 3 scenarios where a negative USDC balance could occur:
  1. 1.
    Buying an option.
  2. 2.
    Selling an option and it expires in-the-money (paying for settlement).
  3. 3.
    Realizing negative perpetual futures PNL.

Example

  1. 1.
    Alice deposits 1 ETH. 1 ETH = $1000. Alice's equity is $1000.
  2. 2.
    Alice uses $500 to buy options. This would bring Alice's USDC balance to -$500.
  3. 3.
    Aevo will convert $500 of ETH into USDC. Alice's equity will still remain as $1000, but it will be composed of $500 of ETH, $0 of USDC, and $500 of ETH options.
Note: This example does not account for trading and conversion fees incurred.