A few enhanced V3 features for traders:
- Much more predictable & simplified PnL
- One unified LP pool for scalable liquidity
- Cross-margining for efficient capital & a complete perps DEX experience
Users can trade different markets with up to 50x leverage.
Risk Management Insights:
β‘οΈ Keep track of all margin parameters, including minimum requirements
β‘οΈ Monitor both Price PnL & Funding PnL
β‘οΈ Understand how, when & why liquidations happen
Position health can be continuously monitored via the UI.
What are Funding Rates?
Funding rates determine the payment between majority/minority side traders when realizing P&L.
This supports a balance between longs/shorts and ensures the market price closely tracks index prices.
If there's more demand for the long side of the market, it will start to skew long. When this happens, funding rates will turn positive, meaning longs will pay funding and shorts will receive it. The opposite is true as well.
V3 funding incorporates "velocity," meaning that rates move faster when the market skew gets heavier. And vice versa.
What are Margin Parameters?
V3 uses a cross-margin system.
Total required margin is an account's maintenance requirement plus a liquidation fee buffer. The account's maintenance margin is the sum of the account's positions' maintenance margins.
Foundational Margin metrics:
- Initial Margin Ratio
- Dynamic Ratio
- Minimum Ratio
- Maintenance Margin
Initial Margin Ratio = Dynamic Ratio + Minimum Ratio
Dynamic Ratio scales linearly on position size; Minimum Ratio is the base/floor margin requirement.
Maintenance Margin = Initial Margin * a configurable %
If Margin drops below maintenance, it's eligible for liquidation . When this happens, the account is closed, and the entirety of the margin collateral is sent to the LP pool.
These parameters are fairly conservative, erring in favor of solvency & minimizing LP risks
Am I Protected Against Unfair Liquidations?
An account can ONLY be liquidated by a keeper if the collateral falls below the margin requirement. There is no centralized decision-making involved, and Parcl's audited smart contracts ensure that liquidations are fair and not arbitrary.
