Overview

Aevo employs a cross-margin collateral framework that includes its native stablecoin, aeUSD. This system allows traders to use multiple assets as collateral, providing greater flexibility in margin trading and enhancing capital efficiency. The cross-margin system improves the trading experience by allowing collateral to be shared across multiple positions, thus reducing the total margin requirements.

aeUSD Stablecoin

aeUSD is Aevo’s native stablecoin, designed to facilitate trading on the platform. It is pegged to a stable asset, typically the US dollar, to provide a consistent value reference for traders. aeUSD is important in Aevo’s collateral framework, offering several advantages:

1. Stability: Pegged to the US dollar, aeUSD provides a stable collateral option, minimizing volatility risks.
2. Liquidity: aeUSD can be easily converted into other assets on the Aevo platform, ensuring that traders have access to necessary liquidity when needed.

Deposits and Redemptions

Traders can deposit aeUSD into their accounts to use as collateral for margin trading. The process for depositing and redeeming aeUSD is straightforward:

1. Deposits: Users transfer aeUSD to their Aevo accounts, where it is held as collateral. This deposited aeUSD can then be used to open and maintain leveraged positions.
2. Redemptions: Users can redeem their aeUSD holdings by withdrawing them from their Aevo accounts, converting aeUSD back into other supported assets or fiat currency.

Cross-Margining

Aevo’s cross-margin system allows traders to use a single pool of collateral across multiple positions. This provides several benefits:

1. Capital Efficiency: By sharing collateral among different positions, traders can reduce the total amount of margin required, freeing up capital for other trades or investments.
2. Risk Management: Cross-margining helps mitigate risk by diversifying collateral across various positions, reducing the impact of adverse price movements in any single asset.

Spot Convert Feature

Aevo’s spot convert feature enhances the flexibility of the cross-margin framework by allowing traders to convert their collateral between different assets quickly and efficiently. This feature supports the dynamic management of collateral and helps traders optimize their margin requirements based on market conditions.

Collateral Composition

The collateral framework on Aevo supports a variety of assets, not limited to aeUSD. Traders can use multiple cryptocurrencies as collateral, providing additional flexibility. The platform regularly evaluates and updates the list of supported collateral assets based on liquidity, stability, and other factors to ensure the security and efficiency of the margin system.

Margin Frameworks

Aevo offers both standard and portfolio margin frameworks:

Standard Margin

Each position must be fully collateralized according to predefined margin requirements. This ensures that traders have sufficient collateral to cover potential losses on individual trades.

Portfolio Margin

This framework allows for cross-margining, where collateral is shared across multiple positions. This approach provides greater flexibility and capital efficiency, as traders can leverage their collateral more effectively.

Liquidation Mechanism

Aevo’s risk management system continuously monitors the collateral and positions of all traders. If a trader’s collateral falls below the required margin threshold, the platform’s automated risk engine will trigger a liquidation process:

1. Automated Monitoring: The risk engine continuously checks the collateral and positions to ensure they meet the margin requirements.
2. Triggering Liquidation: When the margin falls below the threshold, the system initiates liquidation to cover the outstanding liabilities.
3. Execution: The system sells the trader’s collateral to restore the account balance, ensuring that the platform remains solvent and protecting other users from potential losses.

Highlights

1. Aevo employs a cross-margin collateral framework that includes its native stablecoin, aeUSD.
2. aeUSD provides stability and liquidity, making it a reliable collateral option.
3. The cross-margin system allows traders to use a single pool of collateral across multiple positions, enhancing capital efficiency and risk management.
4. Aevo’s spot convert feature enables quick conversion between different collateral assets.
5. The platform supports a variety of collateral assets and employs robust risk management protocols, including automated liquidation processes.