Case Studies

How QTO PNL impacts sizing and margin while trading Quanto Perpetuals

Trading with QTO as collateral:

Because of QTO denomination in Quanto Perpetuals, position size and PNL scale proportionately with QTO price.

If a user longs 1 SOL and the price of QTO increases 10% while their position is open, they are now long 1.1 SOL from the same price.

This increases their USD PNL, but their QTO PNL is the same - the QTO they earn as PNL is just worth 10% more USD now.

If the QTO price decreases 10% instead of increases, the user is now long only .9 SOL and their PNL is 10% lower.

Trading with non-QTO collateral:

The QTO related changes to position sizing discussed above still impact users trading with non-QTO collateral, but the volatility of their collateral should also be considered.

Non-QTO collateral balance is calculated by taking the value of your collateral and multiplying it by it's LTV (listed on the Quanto.trade homepage).

DOGE has an LTV of .85. A user who deposits $100 DOGE will have a collateral balance of $85.

If that DOGE suddenly doubles in price, the user now has $170 collateral in their account. This doubles their available margin to trade with and pushes active positions farther from liquidation.

If that $85 DOGE halves in price, the user now has $42.5 collateral in their account. This halves their available margin to trade with and pushes active positions CLOSER to liquidation.

Trading with stablecoin collateral:

Stablecoins (ideally) don't have the volatility of other forms of collateral, but changes to QTO price can still impact position sizing and margin ratio in the ways described above. Users trading with stablecoins should make sure to monitor their margin ratio for this reason.