Margin and leverage
Initial and maintenance margin, leverage limits per lane, accepted collateral and the ETH haircut for Kimp Contracts.
Kimp Contracts are fully collateralized. A trader posts margin before a position opens, and the Kimp Pool escrows it for the life of the position. This page defines how much margin is required and what counts as collateral.
Margin requirements#
initial_margin = notional / leveragemaintenance_margin = 25% × initial_margin| Leverage | Initial margin | Maintenance margin | Lane |
|---|---|---|---|
| 1x | 100% of notional | 25% of notional | Open and Verified |
| 2x | 50% of notional | 12.5% of notional | Open and Verified |
| 3x | 33.33% of notional | 8.33% of notional | Open and Verified |
| 4x | 25% of notional | 6.25% of notional | Verified only |
| 5x | 20% of notional | 5% of notional | Verified only |
Example: a 10,000 USD notional position at 5x requires 2,000 USD of initial margin. Its maintenance margin is 500 USD.
Leverage limits#
| Lane | Leverage | Max notional per account per asset |
|---|---|---|
| Open lane | 1x to 3x | 25,000 USD |
| Verified Lane | 1x to 5x | 250,000 USD |
The Verified Lane requires a GIWA Dojang Verified Address, checked at every open or increase. See Limits and rewards. Limits are set by governance and adjustable through the timelock.
What leverage means here#
Leverage in KIMP is measured against the premium, not against the price of the asset. A 5x position does not move five times with BTC. It moves with the premium on its notional. A change of 100 bps in the index changes P&L by 1% of notional, which is 5% of initial margin at 5x.
Premium moves are usually measured in tens to hundreds of basis points. The distance to liquidation at each leverage is shown in Liquidation.
Collateral#
| Collateral | Valuation | Status |
|---|---|---|
| Bridged USDC | 1 USDC = 1 USD | At launch |
| ETH | USD value × 0.90 | At launch |
| GIWA KRW stablecoin | To be set by governance | When it exists on GIWA |
ETH haircut#
ETH collateral is valued at 90% of its USD value. The 10% haircut absorbs ETH price moves between the time a position is checked and the time it can be liquidated.
Example: 1.00 ETH at an illustrative ETH price of 3,000 USD counts as 2,700 USD of margin. A position requiring 2,000 USD of initial margin can be opened against it with 700 USD of headroom.
A position margined in ETH carries two risks: the premium and the ETH price. A fall in ETH reduces equity even if the index does not move. Traders who want exposure only to the premium should use USDC.
KRW stablecoin#
GIWA has announced a KRW stablecoin. It will be added as collateral once it exists on GIWA and its parameters are approved by governance. See the Roadmap.
Equity#
equity = margin_value + unrealized_pnl − feesMargin value is collateral after haircut. Unrealized P&L is measured at the mark, the latest finalized index value. Fees are fees owed but not yet paid, which for an open position is the closing fee. A position is liquidatable when equity falls to or below maintenance margin.
Adding and removing margin#
Traders can add margin to an open position at any time, which lowers effective leverage and moves the liquidation level further away. Margin can be withdrawn only while the position remains at or below its lane's maximum leverage after the withdrawal, measured on equity.