Collateral management

Upon opening a position, users deposit collateral to protect the vault from exposure if the trade takes a loss. After opening, users can still deposit and withdraw collateral to manage their position. As can be read here, the higher the collateral, the lower the risk of liquidation (and vice versa). Note: at the opening of a position, the collateral is subject to the following lower bound:

$$ collateral >initialMargin*notionalSize $$

The initial margin is a setting that can be altered per asset. The exact settings per asset can be seen here.

Collateral token

The underlying collateral for a vault is the so-called ‘vault token’. This means that the token that is accepted as collateral depends solely on the vault, and not on the asset that you’re trading on.