Collateral Liquidation via REPO (Auto Borrow)

At CoinFLEX we provide the flexibility to post different cryptocurrencies as trading collateral even though margin is charged in USD (USDC) terms and P&L is realized in real time in USD.  Therefore, should a users USD balance within a sub-account become sufficiently negative (-$10,000) due to the realization of negative P&L the exchange will need to take action.

Currently the exchange will liquidate a portion of the users underlying coin collateral into the SPOT order book to regain sufficient USD balances.  So if a user has deposited BTC as collateral the exchange would perform a sell trade on CoinFLEX’s BTC SPOT order book.

Moving forward the exchange will no longer liquidate the users underlying coin collateral into the SPOT order book, instead the exchange will automatically execute a USD borrow order within the users account.  This USD borrow (i.e. selling a REPO) is executed on CoinFLEX’s REPO order book using the users underlying coin balances as collateral.  So if a user has deposited BTC as collateral the USD borrow in this case would be performed as a sell trade on CoinFLEX’s BTC REPO order book.

Additional information regarding collateral can be found here 3.11 Collateral”.

System Release Notes:

  • Any existing sub-account can use the Borrow function without the need to create a separate borrow specific sub-account.
  • Collateral liquidation rules changed from SPOT balance liquidation to auto-borrow via REPO.
  • Auto-borrow will be triggered when a users USD balance is below a certain threshold.  Initially this will be set at -$9,000 and gradually reduced to -$200.
  • “Borrow USD Position” tab added to the Market Trading UI allowing users to track and manage their borrowing and lending.
  • Borrow related fields added to the order history page on the UI.

 

 

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