Unique Features
Rebalancing Position
STRIKE employs rebalancing mechanism similar to f(X). To ensure a stable trading experience, when traders position falls beneath a certain threshold, their position is rebalanced to prevent liquidation.
Their leverage will be automatically lowered and some borrowed funds will be sent back to the liquidity pool. This mechanism can be ran more than once on a single position, continously resizing the trader’s position when they fall beneath a certain threshold.
Traders have the option to opt out of rebalancing if they choose to.
Example
Alice wants to trade Cardano (ADA) using leverage, which allows her to control a larger position than the amount she invests. She opens up a position with 5x leverage and 3k collateral. Giving her a total position size of 15k
| ADA Price | Collateral (USD) | Position Size (USD) | Debt (USD) | PnL (USD) | LTV |
|---|---|---|---|---|---|
| $1.00 | $3,000 | $15,000 | $12,000 | $0 | 80% |
Step 1: ADA Price Drops
The market changes, and ADA’s price falls by 10% to $0.90. Her position is losing value, and the debt is becoming riskier compared to what she owns. She now risks getting liquidated.
| ADA Price | Collateral (USD) | Position Size (USD) | Debt (USD) | PnL (USD) | LTV |
|---|---|---|---|---|---|
| $0.90 | $1,500 | $13,500 | $12,000 | -$1,500 | 88.89% |
Step 2: Rebalancing to Stay Safe
Because the position value dropped, Alice’s debt is too high compared to her position. To avoid losing everything (liquidation), the system steps in to ‘rebalance’ her position by lowering her leverage.
| ADA Price | Equity (USD) | Position Size (USD) | Debt (USD) | PnL (USD) | LTV |
|---|---|---|---|---|---|
| $0.90 | $1,500 | $12,500 | $11,000 | -$1,500 | 88% |
Step 3: Market Recovers
Now, imagine ADA’s price goes back up to $1.00. Alice benefits from the price increase because she didn’t get liquidated.
| ADA Price | Equity (USD) | Position Size (USD) | Debt (USD) | PnL (USD) | LTV |
|---|---|---|---|---|---|
| $1.00 | $2,889 | $13,889 | $11,000 | -$111 | 79.20% |
Why Rebalancing Matters
Rebalancing does not replace stop loss or adding more collateral. It is an automatic mechanism that prevents a trader’s position from being liquidated. Crypto assets are volatile, and there are always sudden large price movements. Rebalancing protects the trader’s downside when there are sudden movements not in their favor. When the price recovers, the trader will be able to recover some of their losses instead of being completely liquidated with no funds left.
Cross Margin
Cross-margin uses your entire account balance to act as collateral for all your trades at once. Instead of locking up separate money for each trade (isolated margin), all your funds work together to keep your positions open. If one trade is losing money but another is making money, they balance each other out. This lets you use your money more efficiently, but it also means if your total account value drops too much, all your positions could get liquidated at once rather than just individual losing trades.