Health Factor

Drawing from traditional financial markets, we have developed a risk indicator known as Health Factor (HF), identifying it as a safety coefficient for traders and pools.

HF = Total Equity / (Initial Margin + Total Theoretical Value of Buy Positions + Total Theoretical Value of Sell Positions)

The higher HF means the safer the account is, whereas when HF falls below 1, a greater risk is borne. This could result in forced liquidation for both traders and pools, making HF a significant indicator to the overall risk of the system.

Liquidation

When a trader's HF falls below 0.5, the trader would be liquidated and any third party can liquidate the remaining positions. *It is advised that trader should always maintain the HF at safety to avoid margin call and liquidation.

If the trader's HF falls below 0.2, the positions and remaining balance owned would be transferred to the insurance fund. All profits or losses would be borne and owned by the insurance funds with immediate effect or at expiry.