Quanto utilizes a cross-margin collateral system. This means that all of the supported assets held in your account are combined into a single, shared pool of collateral. This pool is used to cover the margin requirements for all of your open positions.
This approach offers flexibility, as a gain in one position can help offset the margin requirements for another, but it's crucial to understand how your total collateral is calculated to manage your risk effectively.
Key Concepts Explained
To understand your borrowing power and risk level, you need to be familiar with these terms:
Loan-to-Value (LTV): Every asset supported as collateral on Quanto is assigned an LTV ratio. This percentage represents how much value that asset contributes to your Total Collateral. For example, a stablecoin like
$USDCmight have a high LTV of 98% (0.98), while a more volatile asset might have a lower LTV.Total Collateral: This is the combined, LTV-adjusted value of all supported assets in your account. It represents your account's total capacity to secure positions. It is not simply the total dollar value of your assets.
Available Collateral: This is the portion of your Total Collateral that is currently unused and available for opening new positions or covering unrealized losses.
Used Collateral: This is the portion of your Total Collateral that is currently locked to maintain your open positions.
How Your Total Collateral is Calculated
Your Total Collateral is the sum of the LTV-weighted value of each asset you hold.
The formula for each asset is: Amount of Asset * Price of Asset * LTV Ratio
Example Calculation:
Let's say your account holds two assets:
1,000
$USDC(Price: $1, LTV: 98%)20
$SOL(Price: $160, LTV: 80%)
Your Total Collateral would be calculated as follows:
$USDCContribution:1,000 * $1.00 * 0.98 = $980$SOLContribution:20 * $160 * 0.80 = $2,560Total Collateral = $980 + $2,560 = $3,540
Your Available Collateral would then be this total amount, minus any collateral already used by your open positions.
Where to Find Your Collateral Information
You can monitor your collateral in real-time in two key places in the Quanto Trade UI:
The "Account Margin" Section: This provides a complete overview of your account's health, including your (Total) Collateral Balance and Available Collateral. This is the best place for a comprehensive view.
The Order Entry Form: Above the order entry fields, you will see your Available Collateral. This allows you to quickly see how much margin you have available for placing a new trade.
Why Your Available Collateral Might Decrease
Your Available Collateral is dynamic and will decrease for several reasons:
Opening New Positions: Each new position requires an initial margin, which is reserved from your available collateral.
Unrealized Losses: If your open positions are in a loss, that unrealized loss is covered by your available collateral.
Staking: Some staking mechanisms may lock your assets, removing them from your collateral balance.
Platform Changes: In rare cases, Quanto may update its risk parameters. This could involve reducing an asset's LTV or removing it as a form of supported collateral, which would instantly reduce your Total and Available Collateral.
Using Sub-Accounts to Isolate Risk
For traders who wish to isolate the risk of a specific strategy from their main funds, Quanto offers the use of sub-accounts.
How it Works: You can create a sub-account and transfer a specific portion of your assets to it from your main account.
The Benefit: The sub-account acts as an isolated margin system. If a position in the sub-account is liquidated, it will only affect the balance held within that sub-account. Your main account's funds remain completely safe.
The Trade-Off: This isolation comes with a critical trade-off. By partitioning your funds, the sub-account has a much smaller pool of collateral to draw from. This increases the risk of liquidation for that specific strategy, as it has less of a buffer to absorb losses. Using sub-accounts requires extra diligence and monitoring.
Always monitor your margin levels closely to trade responsibly. If you have any questions, please contact our support team.