Risk Management

Given the volatility and uncertainty of the on-chain market, Total Return Swaps (TRS) employ a series of risk management measures to protect the interests of both the stakeholders and trading users. These measures will be dynamically adjusted based on market conditions to ensure stability and safeguard user assets.

Lending Limit: For each staking pool, a maximum lending limit is set. This ensures that the total exposure to a particular asset is kept within predefined risk thresholds, preventing excessive concentration of risk that could lead to significant losses during market fluctuations.
User-Specific Position Limits: Each user is subject to an individual position limit within the TRS framework. This control prevents any single user from accumulating excessive positions that could destabilize the market and ensures that no one participant’s risk profile becomes disproportionately large compared to the pool.
Interest Rate Management: Based on the risk of each staking pool and market conditions, TRS adjusts the maximum, minimum, or benchmark interest rates. By limiting the fluctuations in interest rates, it helps avoid market sentiment from excessively influencing borrowing costs and ensures that the rates stay within a reasonable range.
Maintain Margin Ratio: To ensure the stability of borrowing accounts, TRS sets a minimum margin ratio. When market volatility is high, the system will automatically trigger margin calls, requiring users to add collateral to maintain the safety of their accounts, thus preventing the risk of forced liquidations.
Dynamic Leverage Adjustment: TRS will dynamically adjust the platform's leverage ratio during periods of high market volatility. By lowering the leverage ratio, it reduces users' exposure to risk, thus minimizing the possibility of large losses and ensuring platform stability.

With these comprehensive risk control measures, TRS can respond to various risk changes in the on-chain market in a timely manner, ensuring that users' assets are adequately protected and effectively reducing the occurrence of systemic risks.

PreviousLiquidation NextRisk

Last updated 3 months ago

Risk Management

Lending Limit: For each staking pool, a maximum lending limit is set. This ensures that the total exposure to a particular asset is kept within predefined risk thresholds, preventing excessive concentration of risk that could lead to significant losses during market fluctuations.
User-Specific Position Limits: Each user is subject to an individual position limit within the TRS framework. This control prevents any single user from accumulating excessive positions that could destabilize the market and ensures that no one participant’s risk profile becomes disproportionately large compared to the pool.
Interest Rate Management: Based on the risk of each staking pool and market conditions, TRS adjusts the maximum, minimum, or benchmark interest rates. By limiting the fluctuations in interest rates, it helps avoid market sentiment from excessively influencing borrowing costs and ensures that the rates stay within a reasonable range.
Maintain Margin Ratio: To ensure the stability of borrowing accounts, TRS sets a minimum margin ratio. When market volatility is high, the system will automatically trigger margin calls, requiring users to add collateral to maintain the safety of their accounts, thus preventing the risk of forced liquidations.
Dynamic Leverage Adjustment: TRS will dynamically adjust the platform's leverage ratio during periods of high market volatility. By lowering the leverage ratio, it reduces users' exposure to risk, thus minimizing the possibility of large losses and ensuring platform stability.

PreviousLiquidation NextRisk

Last updated 3 months ago