Margin System

By mitigating risk and improving capital efficiency, the margin system revolutionizes the trading of cryptocurrency structured products.

The margin system of VETA aims to alleviate the inherent counterparty default risk in structured products. This system supports transactions through a collateral asset pool, significantly reducing the likelihood of either party defaulting. The margin system supports the credit foundation of the platform by balancing the reduction of counterparty credit risk, effectively hedging risk exposures between different products, and improving capital efficiency. This allows the platform's underlying products to expand and brings significant benefits to investors.

Reduction of Counterparty Risk

Within the margin system, the structured products held by investors and issuers dictate their respective rights and obligations. As long as the risk value in the collateral pool remains healthy, both parties can fulfill their obligations. Different products impose different risk constraints on the buying and selling parties. For products that provide partial principal protection clauses, only a small portion of the principal is needed as collateral, which can mitigate the risk of needing to provide additional collateral.

Improved Capital Efficiency

The margin system enables simultaneous opening of multiple products at a specific risk value, which allows for more efficient use of capital. The margin system calculates risk exposure in real-time and carries out internal hedging of the exposure of the positions, improving the efficiency of fund usage. If the margin is insufficient, the system will auction the assets in the collateral pool. After the collateral assets of the defaulting party have been processed into settlement assets, the settlement obligations of the performing party must be paid first. After the liquidation penalty is deducted, the remaining assets will be returned to the account of the collateral pool of the defaulting party.

Prevention of Extreme Risks

The margin system employs multiple strategies to prevent the propagation of risk under extreme conditions, such as insufficient collateral value, oracle attacks, or violent fluctuations in collateral value. The VETA platform adopts a bilateral liquidation mode, focuses on margin management for issuers with strong professional capabilities, and imposes high penalties for possible default behaviors.

Benefits and Use of the Margin System

For investors on the VETA platform, the margin system offers significant benefits, including enhanced safety of capital, improved capital efficiency, and reduced transaction costs. To use the margin system, investors need to deposit their assets into a collateral pool. Once the assets are in the pool, they can use them to purchase structured products on the VETA platform. For investors, it is very important to regularly monitor the risk value in their collateral pool to ensure that it remains within a healthy range and prevent the risk of being forcibly liquidated.

Compared with pledging to obtain funds for purchasing financial products on other lending platforms, the one-stop collateral pool system and margin system provided by the VETA platform does not require investors to bear additional capital costs, but can obtain the interest income of the collateral, and the margin system can integrate the management of your collateral pool assets and position holdings, greatly improving the efficiency of fund use.

In conclusion, the margin system brings convenience and safety to both parties of the transaction. By drawing on the experience of famous financial institutions at home and abroad in financial securities settlement, our margin system ensures that the trading experience on the VETA platform is safe and convenient.