Risk control

Risk Control

Fluctuations in both the value of the collateral token and the token underlying the contract can lead to the potential liquidation of the position. Traders should vigilantly monitor both the position's profit and loss and any changes in the collateral's value.

A trader is required to establish a maximum margin size for the counterparty, which would also be the highest feasible profit excluding fees. If the position reaches this maximum profit, further profit won't be generated.

Opting for a larger counterparty margin also entails higher position maintenance fees. This is slightly different from the approach taken by other centralized exchanges. Those exchanges usually involve a contract borrow fee that is more closely tied to the position's value, influenced by its leverage. In contrast, Sudo's borrowing fee for perpetual contracts is predominantly determined by the potential maximum profit/loss of the position.