1/ 🚀 Diving into the Gamma Options Margin System! 🧠💡 Before we dive deep, it's crucial to understand three foundational terms. Ready to elevate your understanding? 🚀 Scroll down!
2/ 💼 Liquidity in the Margin Pool: Think of this as the total available funds waiting to be utilized. This pool holds all the money that can be borrowed.
3/ 📈 Borrowed Funds: Simply put, it's the amount currently taken out as loans from our pool.
4/ 🖋 Utilization Rate: This is the ratio of borrowed funds to total liquidity. It's a vital metric, calculated as borrowed funds divided by liquidity.
5/ 🤓 With the utilization rate in hand, it becomes our guide to setting both lend and borrow rates. Curious about how this interplay looks visually? Check out our chart! 📊
6/ ⚖ Balancing Act: Interest rates fluctuate depending on the liquidity-to-borrow ratio (a.k.a utilization rate). It's all about meeting the borrowing demands while maintaining ample liquidity.
7/ 🔝 Max Interest Rate: What happens if all funds are borrowed and lenders can't withdraw immediately? They're rewarded with the max interest rate until their funds are accessible again!
8/ 🚨 Did you know? If the utilization rate nears 100%, interest rates can soar to 400%! This high rate pushes borrowers to repay quickly and encourages lenders to add more funds to the pool.
9/ 💰 Depositing & Withdrawing: Lenders, you can deposit ETH and USDC anytime, boosting the pool's liquidity. And remember, as you pour in funds, interest rates dip due to a decreased utilization rate.
10/ 🔄 Borrow & Repay: Traders and LPs, borrow as you need! Just ensure you close positions and return the funds with the due interest.
11/ 📜 Wrapping Up: This thread offers a snapshot of the Margin Pool Component within Gamma Options. Designed to enlighten both developers and stakeholders, this is your roadmap to navigating our margin system! 🌐
12/ 🔗 For a deeper dive and more technical specifics, check out our complete guide! #GammaOptions #MarginTrading
doc.gammaoptions.com/docs/fundamentals/margin/margin-pool