The escrowed payout cap
No position can win more than 6× its margin, and that is set aside the moment it opens.
4 min read · pre-launch
most a position can win = 6 × its margin
Reached, it closes itself.A position that reaches its cap closes itself. Because the most it can ever be owed is known at the moment it opens, the vault reserves that amount then, and never carries an obligation it has not already funded.
Net escrow
Reserving the full cap for every position would lock most of the vault. But the two sides of a pair pay each other first: when the index runs far enough for every long to hit its cap, every short has already lost its whole margin. So the vault reserves only what the losing side cannot cover, in whichever direction is worse:
reserved = the larger of (6 × long margin − short margin) and (6 × short margin − long margin)
Never less than nothing, and never both at once: the index cannot run up and down together.A level book with M on each side reserves 5M instead of 12M. A one-sided book reserves the full cap. Total escrow may not pass 80% of the USDG in the vault; an order that would push it past is refused, not queued.
Liquidation
A position whose equity falls under 2.5% of its notional is closed by the book. Leverage is capped at 5×, so a 5× position is closed after roughly a 17.5% move against it; its cap sits 120% away the other way.