Synthetic Architecture

ABEx uses Synthetic architecture when opening positions.

Users can deposit any index assets as collateral, and they can choose any trading direction (long or short) on any listed trading pairs (BTC/USD, DOGE/USD etc)

For example, a trader wants to open a 10X long position on BTC/USD using SUI as collateral. After user deposits 1 SUI into the protocol, ABEx transfers 10 SUI into reserve to make sure users can be compensated in the event of liquidation. As the price of BTC/USD fluctuates, the protocol will calculate the user's unrealized P/L based on the oracle price of BTC. When the user closes the position, the settlement currency will be converted back into SUI.

Risk Control

Changes in the price of both the collateral token and the token underlying the contract may cause the position to be liquidated, and traders need to pay careful attention to position P&L and changes in the value of the collateral

A trader must set a reserve amount for the counterparty, which is a maximum potential profit excluding fees. If the position reaches the maximum profit, this means that even if the price of the underlying asset continues to move in the direction expected when the position was opened, the position will not make any more money.

Please note that this is slightly different from other centralised exchanges. Other exchanges have a contract borrow fee that is more dependent on the value of the position, with leverage behind it. Whereas ABEx's reserving fee for perpetual contracts is mainly based on the potential maximum profit/loss of the position.