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Classic Mode

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Blackwing also supports Classic Mode - margin trading without using Limitless Pools. Classic mode works similarly to other margin trading protocols - users are able to open leveraged positions by supplying collateral but they are liquidated if the value of their position drops below a certain threshold. Positions in Classic Mode are not composable, use isolated margin, and only support USDC as collateral and the quote currency.

A user might want to use Classic Mode because the asset they want to trade isn't supported by Limitless Pools.

For exact details on how a Classic Mode trades are executed, see the [Intent Solver ]

Margin Engine​

Classic Mode margin calculations involve position_market_value, initial_position_market_value, position_locked_collateral, position_margin, initial_margin_requirement, and maintenance_margin_requirement.

  • position_market_value is the market value of open positions at the current oracle price.
  • initial_position_market_value is the market value of open positions at the oracle price when the position was opened.
  • position_locked_collateral is the amount of USDC collateral used to open up a position.
  • position_margin is computed as position_market_value / position_locked_collateral
  • initial_margin_requirement is the maximum value position_margin can take when opening a position.
  • maintenance_margin_requirement is the minimum value position_margin can be before it is liquidated.

initial_margin_requirement is a static configured value for each market. For example, if max leverage for a market is set to 5x, the initial_margin_requirement is 5.

maintenance_margin_requirement is calculated as (initial_position_market_value - position_locked_collateral) / position_locked_collateral.

Example (initial_margin_requirement := 5):

  1. A user opens a $100 5x long position for WIF: position_margin is 5. initial_margin_requirement is met and so the user is allowed to open the position. maintenance_margin_requirement is 4 ((100 - 20)/20).
  2. The position increases in value to $120: position_margin is 6. maintenance_margin_requirement is 4.
  3. The position decreases in value to $110: position_margin is 5.5. maintenance_margin_requirement is 4.
  4. The position value decreases to $79. position_margin is 3.95. maintenance_margin_requirement is still 4. Because the user can't meet their maintenance requirement, the position is liquidated.

Additional risk parameters include:

  • loan_book_cap: a max amount of leverage the protocol is allowed to give out.
  • withdraw_threshold: max amount of money a user is allowed to withdraw without review

Liquidation​

When a position is able to be liquidated, anyone is able to permissionlessly liquidate the position on the destination chain. Closing the position yields the liquidator a liquidation reward while remaining collateral is returned to the user.