Risk Parameters

This page summarizes the guard-rails that keep trading stable and the pool solvent. Values shown for testnet are indicative; mainnet parameters will be announced prior to launch.

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1) Position & Leverage

• Contract type: BTC-USD inverse perpetual

• Leverage: up to 50× (testnet; mainnet target same)

• Margin model: isolated per position (no cross margin, no post-open top-ups)

• Per-order margin cap (testnet guard): soft limit ≈ 0.10 BTC equivalent (relayer policy)

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2) Maintenance & Liquidation

Maintenance margin is computed by the protocol/SDK per position:

MaintenanceMargin = (0.004 × PositionSize)
                    + (fee% × BankruptcyValue)
	•	    + (funding% × BankruptcyValue)

• Liquidation trigger: when equity falls to the computed MaintenanceMargin

• Liquidation action: full close at oracle mark; full margin forfeiture

• No partial liquidation tiers (testnet)

See also: PnL & Settlement and Fees & Funding for how fee/funding terms contribute to the formula.

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3) Pool Utilization & Capacity

Twilight is a single-asset (BTC) collateral pool. Capacity is governed by utilization:

• TVL — total LP deposits (BTC)

• TTM — total trader margin locked (BTC)

• Utilization U = TTM / TVL

• Utilization cap (U_cap): 90% (testnet policy)

  • On breach, the relayer may throttle new opens until U < U_cap.

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4) Pricing & Oracle Assumptions

• Execution price: external spot Binance mid (0.5s tick)

• No AMM curve, no on-venue orderbook price discovery

• Roadmap: multi-venue index (incl. on-chain oracles like Chainlink/Pyth), freshness bands, circuit breakers

Current testnet has no oracle circuit breaker active; the relayer falls back to last valid tick if the feed stalls.

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5) Funding (Skew Compensation)

• Interval: hourly

• Purpose: discourage one-sided positioning; compensate pool for directional inventory

• Sign: long-heavy → longs pay; short-heavy → shorts pay

• Residual: payer/receiver imbalance flows to Pool NAV

Full formula and examples: Fees & Funding.

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6) Withdrawals (LP)

• Testnet: withdrawals are instant after block settlement

• Mainnet (preview): subject to treasury/insurance design and possible safety delays during stress

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7) What’s Enforced Where?

Control	Enforced by	Notes
Max leverage, margin rules	Relayer + Validator check	Position-level; verified at settlement
Liquidation threshold	Protocol/SDK computation	Full close on breach
Utilization cap throttling	Relayer policy	Protects pool solvency
Oracle selection & fallback	Relayer + infra	Index/circuit breakers on roadmap

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Related:

• Pricing & Execution — how orders are priced and sequenced

• PnL & Settlement — how BTC PnL settles and updates Pool NAV