Kwenta V3 Docs
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  • 🥂Welcome to Kwenta
  • Welcome to Kwenta
    • 🔄Bridging on Kwenta
  • V3 Perps
    • 📜Perps V3
    • ♨️Multi Collateral
      • What is USDx?
      • The Mechanics of USDx
      • Edge Cases in Liquidation:
      • Settlement of Debt
      • FAQ's
    • 📚Perps Basics
    • 💰Margin Types & Collateral
    • ⚖️Funding
      • Technical Details
    • 🤝Maker or Taker?
    • 💪Leverage & Initial/Maintenance Margin
    • 🔚Account Health & Liquidations
    • 🛜Conditional Orders
    • ⚡Gasless One-Click Trading
      • 🟩Starting/Stopping 1CT
      • ⁉️FAQ
    • 🗣️Delegated Trading
      • 📙Getting started with Delegation
      • 👩‍🎓Managing Delegates
      • 🔐Accessing Accounts Delegate to You
    • 📈Trading Tutorial
  • Infrastructure Overview
    • 📕Getting Started
    • 🔍System Overview
    • 🗂️Account Management
    • 👥Delegate Management
    • 💻Conditional Orders
    • 🌐Oracle Data
  • Resources
    • 🕵️Audits
    • GitHub
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On this page
  • Cross-Margin Account for Enhanced Risk Management
  • Collateral in V3
  • Funding Rates
  • Jargon

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  1. V3 Perps

Perps Basics

Understand these fundamentals!

PreviousFAQ'sNextMargin Types & Collateral

Last updated 1 year ago

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Cross-Margin Account for Enhanced Risk Management

is a risk management tool designed to increase liquidity and reduce the likelihood of forced position liquidations for traders. This method offers greater flexibility however, traders must exercise caution as market volatility can lead to substantial fluctuations in unrealized gains or losses, potentially exceeding the initial collateral thus liquidating all funds in the account.

Cross-Margin is currently the only margin type available in v3. In the future, isolated positions will be available to provide flexibility to traders.

Collateral in V3

Unlike previous versions, where a sUSD was directly used by traders, v3 adds a new layer to the process. Now, every time you deposit or withdraw money, it goes through a wrapper mechanism, this means you can easily deposit and withdraw USDC on a one-to-one basis. This change makes onboarding funds more straightforward and versatile.

Funding Rates

The funding rate and premium/discount mechanism on Kwenta is unique; we have compiled a page that aims to address these topics in a comprehensive manner.

If the funding rate is in the negative, those in short positions compensate those in long ones. Conversely, with a positive rate, those in long positions pay those in short.

Jargon

Unrealized Profit and Loss (UPNL)

  • UPNL showcases potential gains or losses that would result if a trader closed their position(s).

  • It's calculated using the difference in average entry price and the mark price

    (avg entry price - avy exit(current) price ) * position size

Realized Profit and Loss (UPNL)

  • PNL showcases gains or losses that are a result of a trader closing their position(s).

  • It's calculated using the difference in average entry price and the exit price

    (avg entry price - avy exit price ) * position size exited) +/- Fees & funding 

Liquidation:

  • Refers to the forced closure or unwinding of a trader's open futures position due to insufficient margin or collateral to cover the required maintenance margin minimums.

Open Interest (OI)

  • OI gives the total value of ongoing perpetual contracts held by traders. These are contracts that remain open and haven't been closed.

Account Health (Margin Ratio)

  • Represented as a percentage on both the dashboard & the main futures UI, it indicates the health of a trader's account.

  • When the equity balance matches the maintenance margin account health will reach 100% & traders will get liquidated.

AccountHealth = requiredMaintenanceMargin / availableMargin * 100

Initial Margin

  • Is the percentage of the purchase of a future position that must be covered by cash or collateral when leverage trading. (I.E to open a $1000 notional trade at 10x a initial margin of $100 is needed)

Maintenance Margin

  • The minimum amount of equity a trader must maintain in their trading account to keep their position open. If the account balance (which combines deposited balances and UPNL) drops to this mark, liquidation will occur.

If account equity falls to or below the Maintenance Margin, liquidation will occur!

Account Equity

  • A combination of a trader's account balance and UPNL, this metric indicates a balance as if all positions are closed at the current time.

account equity = DepositedBalance + UPNL

Cross-margin
💰Margin Types & Collateral
⚖️Funding
📚
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