1/ π Diving into the Gamma Options Margin System! π§ π‘ Before we dive deep, it's crucial to understand three foundational terms. Ready to elevate your understanding? π Scroll down!
2/ πΌ 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/ π Borrowed Funds: Simply put, it's the amount currently taken out as loans from our pool.
4/ π 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/ π€ 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! π
6/ β 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/ π 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/ π¨ 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/ π° 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/ π Borrow & Repay: Traders and LPs, borrow as you need! Just ensure you close positions and return the funds with the due interest.
11/ π 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! π
12/ π For a deeper dive and more technical specifics, check out our complete guide! #GammaOptions #MarginTrading
doc.gammaoptions.com/docs/fundamentals/margin/margin-pool