Liquidity & Depeg Risk

Infinity can accept a broad, and diverse set of collateral from:

  • Basic tokens like ETH, USDT, USDC, DAI, WBTC, to

  • Yield-Bearing tokens like Aave's aTokens, and Compound cTokens, to

  • Liquid Staking tokens like Lido's stETH, to

  • Real World Assets, like OpenEden, MatrixDock or Ondo Finance's tokenized money market funds and short-term US Treasury bills

Liquidity Risk results from a difference in the underlying liquidity and number of trading venues available for each token. In addition, fixed rate positions traded in Infinity have no natural 'hedge' or offsetting position on other exchanges (given the limited number yield curve protocols), which may similarly results in illiquidity concerns.

Depeg Risk results from the potential price deviation (away from 1) in stablecoins, which may occur for several endogenous and exogenous factors. As tokens in Infinity are priced in USD, a depeg in stablecoins (such as USDT, USDC, DAI) in Cash or PV(Asset) depeg would be devalued, and potentially cause a widening of your Maintenance Margin, as a result of a larger deviation in your Stressed NAV, depending on the composition of your portfolio (in particular whether you have a FX mismatch in your cash + assets vs. liabilities).

The following pages detail the liquidity risks mentioned above.

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