Risk Management

all risk management parameters are subject to change over time to reflect evolving market conditions, ensuring sustainable liquidity and a well balanced trading environment dynamic trading fees trading fees are dynamically adjusted based on order size, collateral liquidity, and market volatility this approach ensures that the cost of large orders more accurately reflects their impact, fostering a fairer and more balanced trading environment view details here https //docs typus finance/fees#iomq1 maximum trade size to manage the risk exposure of tlp holders, the maximum trade size is governed by two key factors the open interest cap and the maximum single order reserve usage open interest cap an open interest cap has been implemented to prevent excessive one sided exposure in any given market this helps reduce the risk of disproportionate losses for liquidity providers and promotes more stable and balanced trading conditions caps are set individually for each market, as outlined below example sui/usd market user long position size = 25,000 sui user short position size = 10,000 sui total open interest cap (per direction) = 100,000 sui remaining open interest available for new long positions = 100,000 sui 25,000 sui = 75,000 sui remaining open interest available for new short positions = 100,000 sui 10,000 sui = 90,000 sui asset market open interest cap long open interest cap short crypto sui/usd 1,000,000 sui 1,000,000 sui btc/usd 100 btc 100 btc eth/usd 10,000 eth 10,000 eth sol/usd 100,000 sol 100,000 sol deep/usd 10,000,000 deep 10,000,000 deep wal/usd 10,000,000 wal 10,000,000 wal apt/usd 1,000,000 apt 1,000,000 apt commodity xau/usd 10,000 xau 10,000 xau maximum single order reserve usage for each collateral token, the maximum single order reserve usage is determined by the available capacity and a maximum reserve ratio of total collateral liquidity maximum single order reserve usage = min ( total collateral liquidity reserved amount , max reserve ratio total collateral liquidity ) example total collateral liquidity = 35,000 usdc reserved amount = 10,000 usdc max reserve ratio = 10% maximum single order reserve usage = min ( 35,000 usdc 10,000 usdc , 35,000 usdc 10% ) = min ( 25,000 usdc , 3,500 usdc ) = 3,500 usdc the maximum single order reserve usage directly limits the maximum trade size when using leverage it represents the maximum amount of collateral that can be borrowed for a single trade this mechanism helps manage risk and ensures the platform maintains sufficient liquidity for all users insurance fund insurance fund a critical layer of protection for tlp to safeguard tlp holders against extreme market volatility and unexpected losses, 1% of the notional value from each liquidated position is allocated to the insurance fund this fund acts as a safety net, reimbursing the tlp in the rare event of significant loss helping preserve the integrity and sustainability of the liquidity pool additionally, during liquidation, any remaining collateral after deducting losses and fees is retained as a liquidation fee and contributed to the tlp, further reinforcing the system’s resilience together, these mechanisms form a robust defense for tlp against adverse trading outcomes forced close position mechanism during periods of high market volatility, rapid price movements can lead to significant gains for traders resulting in significant unrealized losses for the tlp (typus liquidity pool) to ensure the long term sustainability of the platform, the system may automatically close profitable positions even if the trader has not set a take profit order this is known as the forced close position mechanism, a risk management safeguard it is designed to mitigate extreme exposure and preserve balance for all participants