Collateral Weights

  • Updated

To determine collateral parameters such as the collateral ratio and discount ratio, we have adopted the risk methodology used by Aave. By following this methodology, it means factors such as the token’s market capitalization, trading volume, volatility, and so on, are taken into account when considering new assets as collateral and monitoring the existing collateral types supported on Perp v2.

Weighting System

A weighting system is applied to different types of collateral that are supported by Perp v2, shown by the table below:

Collateral type Weight
USDC 100%
ETH / WETH 82.5%
FRAX 75%
OP 45%

Learn more about multi-collateral

Examples

  • Trader deposits 1,000 USDC.
    • Total collateral = 1,000 USDC
  • Trader deposits 1 ETH (when ETH price is 1,500 USDC).
    • Total collateral = 0.825 x 1,500 USDC = 1,237.5 USDC
  • Trader deposits 1,000 FRAX.
    • Total collateral = 0.75 x 1,000 USDC = 750 USDC. 
  • Trader deposits 500 USDC, 1 ETH (when ETH price is 1,500 USDC), and 500 FRAX.
    • Total collateral = 500 USDC + (0.825 x 1,500 USDC) + (0.75 x 500 USDC) = 500 USDC + 1,237.5 USDC + 375 USDC = 2,112.5 USDC. 

Collateral Caps

Caps on deposits for non-USDC collateral types are enforced as a safety measure. The cap amount depends on liquidity on the Optimism network for each of the supported assets, so we can safely liquidate collateral when necessary. 

Deposit caps can be seen on the homepage of app.perp.com

Screenshot_2022-10-18_at_00.45.06.png