Collateral

Surge provides traders the ability to utilise leverage, thus amplifying their trade sizes relative to the assets they hold. The amount of leverage which can be deployed is denoted by the Max Leverage drop-down menu shown below, which varies for each trading pair depending on overall exchange risk. At the time of writing, the XRD/USD pair currently allows a maximum 10x leverage which is expected to increase as the liquidity pool matures and exchange risk is reduced.

The assets that a user deposits to the exchange are referred to as Collateral. Surge currently allows the following assets to be deposited as collateral:

• sUSD

• xUSDC

• xwBTC

• xETH

• XRD

• LSULP

The amount of collateral along with the selected leverage defines the maximum size of any trade. For example, assume a user deposits $500 of xUSDC to Surge as collateral. Assuming they have no other positions currently open, they proceed to the XRD/USD pair and open a Market Long, selecting 10x as their Max Leverage. This allows the user to open a position worth $5000 with only $500 deposited initially.

As the trader's position is amplified by 10x, any gains (or losses) are also magnified. Leverage therefore provides traders the opportunity to increase risk (and potential reward) without requiring the up-front capital.

The collateral provided is used to provide security against this leveraged position being opened. In the example above, utilising 10x leverage means that in the event that the market moves against the traders position by more than 10%, their entire collateral would be at risk of Liquidations.

Cross Margin Collateral

A variety of assets can be deposited to provide security against leveraged positions. Surge aggregates traders' total deposited collateral to support multiple positions. This means that a trader does not need to explicitly provide collateral for individual positions. Surge will automatically take into consideration the total collateral provided, along with any open positions when considering margin requirements.

This provides greater flexibility and efficiency in managing margin across multiple trades, without needing to open separate accounts.

Collateral Value & Discount

To determine the asset value of any collateral provided, Surge may apply a discount, which is denoted in the Collateral table:

For the purposes of valuing collateral, the indicated discount is applied to the current market value which represents the risk of the collateral and potential cost of liquidation. This allows a variety of collateral with different risk and liquidity to be utilised as security against a leveraged position. In the table above, USD carries no discount due to it's quality and high liquidity. XRD on the other hand, is discounted to 90% to account for it's relative risk.