To provide users with more flexibility when managing their margin and collateral balance, the Derivatives Wallet is now accepting additional virtual assets for deposits as collateral.

The primary collateral asset for the Derivatives Wallet will remain as USDC, which will hold a collateral weight of 1. However, the wallet will now also accept USDT as secondary collateral, which will hold a collateral weight of 0.975.

The Derivatives Wallet may support additional virtual assets as primary or secondary collateral in the future.

Collateral Tier

Collateral

Collateral Weight

Coin Index Price to USD

Primary Collateral

USDC

1.00

1:1

Secondary Collateral

USDT

0.975

USDTUSD Index Price

Margin Balance = Total Collateral Balance + Unrealized PnL – Fees

Total Collateral Balance (USD) = Σ (Coin Balance × Collateral Weight × Coin Index Price)

Automatic Conversion

To help avoid unnecessary liquidations, the Exchange will automatically convert secondary collateral into USDC when one of the following conditions are met:

  • USDC Balance + Session Unrealized PnL < 0 , and Absolute( (USDC Balance + Unrealized PnL) / (Total Collateral Balance + Min(0, Session Unrealized PnL)) ) > 4

  • USDC Balance + Session Unrealized PnL < - 30,000

When an automatic conversion is triggered, the required amount of secondary collateral will be converted into USDC so that the triggering conditions are no longer true. The conversion will be carried out in a single transaction.

Conversion Calculation

The amount of USDC that’s required from the conversion is:

The amount of secondary collateral that will be converted into USDC is:

∴ amount_Converted=amount_USDC, Required*1/index_USDC/Collat

Let

The buffer, is added to the conversion calculation to avoid boundary conditions. is 1%, which means the conversion amount will be slightly more than what’s required.

Manual Conversion

Users can also manually convert secondary collateral assets into USDC from their Derivatives Wallet by clicking on the Convert button and filling out the Conversion prompt order window.

Slippage Tolerance

The slippage tolerance allows a user to specify a % tolerance for the conversion so that if the conversion index price deviates unfavourably above the specified tolerance %, the conversion will be cancelled.

Conversion Fees

A conversion fee of 0.3% will be applied on the converted secondary collateral amount for both manual and automatic conversions.

Transactions

Users can view their conversion history by clicking on the Transactions tab from the Derivatives Wallet and filtering the Transaction Type column to Automatic_Conversion or Manual_Conversion. Each conversion will be displayed in 2 separate entries, one for the debit amount and the other for the credit amount.

Collateral Withdrawals

ValueC = Total Collateral Balance (USD) - Initial Margin + MIN ( Session Unrealized PL, 0) - MAX (Session Realized PL, 0)

The amount of USDC that’s available for withdrawal is the MIN (USDC Balance, ValueC).

If the USDC available for withdrawal is greater than or equal to zero, then the user can withdraw any other collateral up to the corresponding maximum balance of the collateral currency, provided that the Total Collateral Balance post-withdrawal is higher than the Initial Margin required for the user’s positions and open orders.

ValueT = ValueC * Coin Index Price

The amount of USDT available for withdrawal is the Min(USDT Balance, ValueT)

Deposit Limit

Deposits into the Derivatives Wallet will need to meet the below limit condition:

Total balance of USDC and USDT <= 10 mil

Scenario 1: USDC Balance < -30k

Assuming the USDC balance is -50k, an automatic conversion will be triggered and the required USDC amount will be 20k. The post-conversion USDC balance will be -30k

Assuming that there is no Session Unrealized PnL, the conversion fee is 0.3% and USDC/USDT index price is 1.0001.

Coins

Before Conversion

After Conversion

USDC

-50,000 USDC

-30,000 USDC

USDT

100,000 USDT

100,000 - (Converted USDT) - Conversion Fee

= 100,000 - (20,000 x 1.01 ÷ 1.0001) - (20,000 x 1.01) x 0.003

=100,000 - 20197.9802 - 60.6

= 79,741.4198

Total Collateral Balance (USD)

(100,000 × 0.975 × 1.0001) - 50,000

= 47,509.75 USD

(79,741.4198 x 0.975 x 1.0001) - 30,000

= 47755.6591 USD

Note: Total collateral balance goes up as USDC balance increases

Scenario 2: USDC Balance + Session Unrealized PnL < 0 , and Absolute( (USDC Balance + Unrealized PnL) / (Total Collateral Balance + Min(0, Session Unrealized PnL)) ) > 4

While the USDC balance is above -30k, because the abs( -10,000/ 1,701 ) = 5.884, which is larger than 4, automatic conversion will be triggered.

Assuming that there is no Session Unrealized PnL, the conversion fee is 0.3% and USDC/USDT index price is 1.0001.

Coins

Before Conversion

After Conversion

USDC

-10,000 USDC

USDC Required

= (abs(-10,000) - 4 x 1701) x 1.01

= 3,227.96

-10,000 + 3,227.96

= -6,772.04 USDC

USDT

12,000 USDT

12,000 - (Converted USDT) - Conversion Fee

= 12,000 - (3,227.96 ÷ 1.0001) - 3,227.96 x 0.003

= 8,762.678884 USDT

Total Collateral Balance (USD)

(12,000 × 0.975 × 1.0001) - 10,000

= 1,701 USD

(8,762.678884 × 0.975 × 1.0001) - 6,772.04

= 1,772.426273 USD

abs(-6,772.04 / 1,772.426273) = 3.8208 >! 4 (Condition no longer met)

Note: Total collateral balance goes up as USDC balance increases.

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