Traders

Overview for traders.

Traders

Traders have the ability to use their altcoins as collateral for a perpetual contract on an underlying asset. In order to enter a trade, a trader must submit their altcoins as collateral, ensuring the collateralized altcoin has a corresponding liquidity pool to facilitate the trade. Traders have a wide variety of trade options, with the ability to choose the underlying asset they wish to speculate on (BTC initially), the price direction they seek to speculate on (long / short) and the desired leverage for their position. Following the opening of their trades, traders either make a profit or loss, or are liquidated.

Profit and Loss

When initiating a trade, the associated profits and losses (PnL) are directly influenced by movements in the price of the underlying asset with PnL settlements being paid out in the collateral token provided. Any change in the underlying assets value price in USD value has a direct proportional impact on the PnL payouts denominated in the altcoin collateral token. Given leverage increases exposure in trades, such impacts are multiplied by the leverage.

PnL (%) = (altcoin collateral * price difference * leverage / open price - accumulated funding fees) / altcoin collateral * 100

Longs: price difference = current price - open price

Shorts: price difference = open price - current price

Liquidation

In quanto derivatives, the type of collateral does not directly influence the calculation of the liquidation price. This is crucial in ensuring that fluctuations in the collateral's value do not affect the stability of the position. The formulas are designed to isolate the liquidation mechanism from such external factors. Liquidations occur when BTC price movements result in a 90 percent loss - with a liquidation price distance being calculated to identify how much of a price movement of BTC in USD would result in such liquidations. Given that leverage amplifies profits and losses, leverage is also taken into account in liquidation formulas. Below are the formulas to calculate liquidations.

Liquidation Price Distance:

Liquidation price distance = open price (altcoin collateral * (0.9) - accumulated funding fees) / (altcoin collateral * leverage)

The liquidation price distance is the price movement needed from the open price to trigger liquidation. It considers only the percentage of the original position at risk (90%) and the leverage. Based on your directional bet of long or short, a liquidation price is set using the liquidation price distance. Once that price is met, liquidation occurs.

Final Liquidation Price:

Long: liquidation price = open price - liquidation price distance

Short: liquidation price = open price + liquidation price distance

You can view the liquidation price on the trading interface before executing a trade.

Open / Close Fees

The trading fee for opening a position is 0.07% of the position size. Similarly, there is a 0.07% fee when closing the position. These fees also apply when increasing the size of an existing position or partially decreasing a position size.

Price Impact

When opening a position, there may be a price impact that affects your entry price. If your position helps balance the long / short ratio of the underlying collateral pool, you will experience zero price impact. If your position imbalances the long/short ratio, your trade will incur a price impact, resulting in a less favorable entry price. Depending on whether your trade position is long or short, your resulting entry price may be higher or lower.

In the event of a crossover, where your trade shifts the dominant open interest, price impact is calculated based on the amount that crosses over, with the rest is settled with zero price impact. You can view the specific price impact values on the interface before executing a trade.

Price Impact (%) = base impact factor * (multiplier ^ impact exponent) * (absolute difference in OI after trade - absolute difference in OI before trade) / trade size * 100

The multiplier accounts for the size of the liquidity pool and the long/short balance to adjust the price impact.

Funding Rate

While a position is open, you may incur positive or negative funding fees in altcoin units depending on your trade position. Traders on the side of the dominant open interest pay funding fees to the opposite side, with individual payouts proportional to the position size and the difference in open interest.

Funding rates for the collateral pair can be viewed on the interface before executing a trade.