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Partial Cash Collateralization Parameters

CallCollatScalingFactor

Values
  • callCollatScalingFactor: 0.7
Meaning/Justification
  • Scales the amount of long call cash collateral held by the LP
  • Increases the capital efficiency of the AMM by freeing up liquidity that would have been used in a fully collateralized system.

PutCollatScalingFactor

Values
  • putCollatScalingFactor: 0.8
Meaning/Justification
  • Scales the amount of long put cash collateral held by the LP
  • Similar to the callCollatScalingFactor, this parameter increases the capital efficiency of the AMM by freeing up liquidity that would have been used in a fully collateralized system.

AdjustmentNetScalingFactor

Values
  • adjustmentNetScalingFactor: 0.9
Meaning/Justification
  • Percentage of liquidity that can be used in a contract adjustment event.
  • This parameter caps the total pool value used in the calculation for scaling longs down to ensure there is a cash buffer in an insolvency event.
  • Reserves some value for the LP token to safe guard the price going to 0.