Positions

Borrowing

Users can borrow funds from the funding pool. Collateral is the amount of tokens a user deposits in addition to the amount he is borrowing from the pool. In addition to collateral, users must also post maintenance margin - This can be thought of as insurance on the borrowed amount.

The amount a user borrows relative to the amount of collateral he posts is called his leverage. Each market has limits on the amount a user can borrow and the amount of leverage he can use.

As time goes on, a given user pays interest on the amount he has borrowed - The amount of interest he pays is dependent on the interest rate and the duration for which his position has been opened.

Liquidation

When a user opens a position he converts his borrowed amount plus his collateral amount into asset tokens. In other words he does this:

swap(borrowed amount + collateral amount) = asset tokens

If the amount of asset tokens he has is worth less than the collateral amount he has borrowed then he can be liquidated:

swap(asset tokens) < collateral amount = can be liquidated

If this is the case then a seperate user can attempt to liquidate the position. In the case of a liquidation, the following swap function is carried out:

swap(asset tokens) + maintenance margin = liquidation amount

This liquidation amount is then compared to the borrowed amount - Any excess is used to reward various participants.

Max(borrowed amount - liquidation amount, 0) = total reward

The total reward is distributed in the following ways:

• Liquidator reward: 3%

• Funding Pool reward: 50%

• IFEX token reward: 47% (reward is swapped to IFEX prior)