Collateral Management

Collateral Management explains how XCCY values, monitors, and utilises assets to secure positions, margin, and leverage across all products.

Core Concept

• Collateral is the foundation of risk coverage, leverage, and capital efficiency

• XCCY accepts a wide range of assets, including stables, LSTs, yield-bearing tokens, and real-world assets

• Each asset type is valued according to its risk profile, liquidity, and correlation

Valuation Principles

1. Cash Stables

   • Priced at 1 USD with a depeg guard for sudden deviations

   • Price feeds come from reliable oracles like Chainlink or Pyth

2. Yield-Bearing Stables

   • Value is derived from shares × underlying asset price

   • Includes Lido, RocketPool, or vault tokens

3. Liquid Staking Tokens (LSTs)

   • Priced as shares × exchange rate to base asset × base asset to USD price

4. Lending Protocol Tokens (Aave, Morpho, Fluid, etc.)

   • Collateral value = token balance × index × underlying asset price

5. Real-World Assets (RWA)

   • Priced using NAV per share in USD

6. Pendle Tokens (PT/YT)

   • PT: oracle TWAP or discounted NAV

   • YT: realizable cash leg only, ignoring expected yield

Collateral Use

• Collateral secures open positions, swaps, and fixed-yield deposits

• Open orders block collateral based on the worst-case execution of the side with the largest potential loss

• Margin mode (Isolated, Portfolio, X-Mode) determines how efficiently collateral is utilized

• Excess collateral may be routed into XLP senior tranches to generate additional yield without increasing liquidation risk

Key Takeaways

• Collateral is dynamically valued to reflect risk, liquidity, and market changes

• Open positions and orders consume collateral according to worst-case exposure

• Margin mode affects collateral efficiency and leverage

• Idle collateral can generate extra yield through XLP strategies