Risk Management

Risk Management Framework:

  • Real-time monitoring of xPOSITION leverage and collateralization ratios, triggering rebalancing or liquidation as needed.

Real-Time Leverage Fluctuations:

  • Market volatility and user actions affect leverage ratios, with dynamic adjustments by the protocol.

Rebalance and Liquidation Triggers:

  • Threshold-based triggers initiate rebalancing or liquidation to maintain system stability.

Reserve Fund and Bad Debt Redistribution:

  • Reserve funds enhance risk resistance; under-collateralized debt is proportionally distributed across active positions if reserves are insufficient.

Recapitalization:

  • When the total collateralization ratio falls below 100%, the protocol halts new xPOSITION openings and utilizes protocol assets to restore the fxUSD peg.

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