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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.
When a negative USDC balance is incurred, 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.Buying an option.
- 2.Selling an option and it expires in-the-money (paying for settlement).
- 3.Realizing negative perpetual futures PNL.
- 1.Alice deposits 1 ETH. 1 ETH = $1000. Alice's equity is $1000.
- 2.Alice uses $500 to buy options. This would bring Alice's USDC balance to -$500.
- 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.
Last modified 8d ago