Introduction

With Infinity Version 1.0, we looked to DeFi best practices to design a system that was familiar to users and yet could be adapted to be more robust. With our progression towards a more complex product suite and trading environment, we decided to drop the more user-friendly or 'basic' approaches in favor of more robust risk management.

Infinity's new risk management system is built around is a Portfolio Margin (denoted, "PM") approach. PM provides the most capital efficient experience to end-users, however it requires a comprehensive system of risk monitoring and robust liquidation framework.

One of the core risks that Portfolio Margining poses to DeFi protocols is idiosyncratic risk, that is, the risk that the price of a potentially overweighted single asset moves up/down quickly, or such asset/currency goes into default causing price discontinuities and potentially precipitous decline in all other assets.

To mitigate these risks, Infinity has chosen to limit the assets to only very blue-chip or higher-quality type tokens and/or those with deep liquidity. Where new collateral assets may be accepted, Infinity will require that their credit risks be hedged fully.