System Caps (size, cumulative slippage)

System Caps

1. LTV & Utilization Caps

• Enforced per asset per ticket: Refer to the LTV Policy.

• Per-asset utilization: Fixed limits apply. New loans are paused or restricted until capacity is available.

2. Cumulative Price-Impact Cap

• A cap ensures the worst-case liquidation for all open loans stays within a max deviation from spot price, based on an impact-aware TWAP.

• Initial policy: Target ≤10% deviation, adjustable via governance depending on liquidity conditions.

• Origination halts, and LTV targets are lowered if the modeled impact surpasses the cap.

3. Ticket & Daily Caps

• Per-ticket and daily notional caps: Both minimum and maximum values are dynamic, depending on venue liquidity and volatility.

• The quote includes a validity window (e.g., ≤4h); a new quote is necessary if funding occurs post-expiry.

4. Volatility & Venue Caps

• Circuit breakers: Triggered by abnormal intra-day volatility, oracle divergence, or hedge venue constraints to pause quotes/disbursements.

• Hedge capacity per venue: Monitored across USDT/USDC/BTC; sizes are limited if capacity is constrained.

5. Governance & Changes

• Any cap changes are logged in the public changelog and reflected in future quotes.

• Define conditions for emergency pauses, such as network events or liquidity shocks.