Multi-asset collateral allows traders on Perplex to use different types of assets to secure their trading positions in perpetual futures. This provides flexibility and can enhance trading efficiency.
What is Multi-Asset Collateral?
Multi-asset collateral allows you to use different types of assets to secure your trading positions.
On Perplex, you can use the following assets as collateral:
- USDC
- wAR
- qAR
- AO
- USDA
Using multiple assets provides flexibility and enhances your ability to trade efficiently.
How Multi-Asset Collateral Works
Unified Margin Account
Perplex uses a cross margin system with a unified margin account, meaning:
- Combined Collateral: All your accepted assets are pooled together to support your open positions.
- Real-Time Valuation: The platform calculates the total value of your collateral based on current market prices.
- Automatic Adjustments: As asset values fluctuate, your collateral value updates automatically.
Margin Requirements
- Initial Margin: The minimum amount required to open a position.
- Maintenance Margin: The minimum balance needed to keep a position open. Falling below this triggers liquidation.
- Deposit Collateral: To start trading with leverage, a trader must deposit an asset, such as a stablecoin or cryptocurrency as collateral.
- Open Position: The trader can then open a long or short position using leverage, which means they can trade a larger amount than their collateral would initially allow.
- Maintenance Margin: Perplex requires the trader to maintain a minimum amount of collateral (maintenance margin) to keep the position open.
- Liquidation: If the value of the collateral falls below the maintenance margin due to adverse price movements, Perplex will automatically close the position to prevent further losses. This is called liquidation.
Example:
- Starting Position: Suppose you want to trade Ethereum perpetual futures. You deposit $1,000 in USDC as collateral.
- Using Leverage: With 10x leverage, you can open a position worth $10,000. If you opened a long position and the price of Ethereum goes up, you make a profit. If it goes down, you incur a loss. In the case where you opened a short position, ETH's price going down will increase your position's value.
- Risk of Liquidation: If the market moves against you and your collateral falls below the maintenance margin, your position will be liquidated.
Benefits of Multi-Asset Collateral
- Flexibility: Use different assets to secure your positions.
- Risk Management: The cross-margin system uses your entire collateral pool to support all positions, reducing liquidation risk.
- Capital Efficiency: Control larger positions without needing separate funds for each one.
Summary
On Perplex, collateral is the asset that traders deposit to secure their leveraged positions. It provides a safety net for potential losses and ensures that traders can participate in leveraged trading while minimizing the risk to themselves and the platform. If the collateral value falls too low, the position is liquidated to cover the losses.
