βš™οΈCollateral Maintenance

Users must top-up their collateral above 5% notional to avoid their position being unwound.

Currently, only USDC is used for collateral. However, we are working diligently to enable any major cryptocurrency can be used as collateral for any Synth Option.

At the heart of all Synth Options is collateral, or the value that backs them up. For example, before any trading can begin with a Synth Option, the user must set aside 10% of the value as a safety net (kind of like a security deposit).

Thanks to the Synth Options model allowing for 20x the borrowing power (leverage), the smallest safety net (collateral) needed is more than 5%. If the value of this safety net drops below that 5% threshold, the amount of money or assets at risk in the trade is cut in half to keep things safe. However, if the user adds more to their safety net to keep it above 5%, their at-risk amount stays the same. In both scenarios, there's no forced sell-off (liquidation) of the user's assets.

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