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Perp Parameters

In this section, we list the main parameters of the protocol and explain how they work

Leverage​

  • MMR: The Maintenance Margin Ratio is the margin ratio value below which the first liquidation step is triggered. When the MR of a position falls below this threshold, the position becomes liquidable according to the logic defined by the subsequent parameters. The margin ratio (MR) is defined as follows:

  • multipleMMRsteps: It defines the number of liquidation steps and the MMR value at which each step is triggered. If we have two liquidation steps with values MMR/2,MMRMMR / 2, MMRMMR/2,MMR, this means that if mr < MMR, liquidation step 1 applies, and if mr < MMR / 2, liquidation step 2 applies.
  • TradermaxLeverage: maximum leverage allowed for traders by the protocol.
  • LPmaxLeverage: maximum leverage allowed for liquidity providers by the protocol.

Liquidation settings​

  • liquidationFractions: percentages of the position to be liquidated depending on the liquidation step.
  • liquidationDiscounts: discount offered to the liquidator to take over the position in the case of full liquidation, that is, when mr = MMR / 2. The other discount values depend on mr according to a specific formulation that makes the discount increase as the mr decreases.
  • insFundFraction: Percentage of the liquidator discount that goes to the insurance fund.

Trading & Liquidity Minimums​

  • minimumTradeSize: minimum trade size allowed by the protocol.
  • Minimum allowed liquidity deposit: minimum deposit required in the Vault to open a position.

Trading Fees​

  • tradingFee: Fee applied to trades on opening and closing.
  • public fee: portion of the trading fees allocated to cover fixed cost.
  • feeLP: portion of the trading fees collected by LPs directly within the AMM.
  • autoCloseFee: flat fee for automatic position closures.
  • minFee: minimum fee applied to the trading fee.

Insurance Fund ​

  • insuranceFundCap: maximum amount of insurance fund retained by the AMM in that specific market. Once this cap is reached, the funds allocated to the insurance fund are redirected toward the growth of the protocol.

Liquidity Fee Settings ​

  • liquidityMinFee: minimum fee that LPs are required to pay when depositing liquidity.
  • public liquidityMaxFee:  maximum fee that LPs are required to pay when depositing liquidity. These fees are collected by the other LPs.
  • public liquidityFeeK: parameter that defines how sensitive the fee variation is; the higher it is, the more slowly the fee changes.

Funding Rate​

  • fundingC Asset: parameter that defines how high the Funding Rate is based on LP exposure; the higher this parameter is, the lower the FR will be under the same conditions.

Curve Parameters​

  • shortCurveParameterA, shortCurveParameterB, longCurveParameterA, longCurveParameterB: parameters that affect the system’s slippage by defining how quickly it changes based on trade size. These parameters therefore determine, given the same liquidity conditions and all other market parameters, the slippage: meaning how far the trader’s execution price deviates from the oracle price. Slippage thus represents a cost for traders and a gain for LPs.