Perps Protocol Mechanics

Emofi Perp DEX enables leveraged long and short exposure through perpetual contracts that do not expire. Users can maintain positions as long as account requirements remain satisfied and protocol constraints are respected.

Perpetuals differ from spot instruments in both purpose and behavior. Spot trading transfers assets. Perpetual trading manages synthetic directional exposure. This distinction is essential for understanding margin behavior, funding effects, and liquidation risk.

Contract and Position Lifecycle

A typical perpetual position on Emofi follows a lifecycle:

1. user deposits collateral and opens exposure,

2. account equity evolves with market movement and fees/funding,

3. user adds/reduces collateral or position size as conditions change,

4. position is partially or fully closed by user action, or reduced through risk enforcement when thresholds are breached.

Margin Framework

Margin is the collateral foundation for leveraged exposure.

• Initial margin governs position entry eligibility.

• Maintenance margin governs position survival requirements.

When equity falls below maintenance requirements, liquidation eligibility is triggered.

Leverage Dynamics

Leverage increases notional exposure relative to collateral. This improves capital efficiency but compresses tolerance for adverse movement.

Higher leverage means:

• faster equity drawdown under opposing moves,

• shorter response windows for corrective action,

• and increased importance of proactive risk management.

Mark Price and Risk Evaluation

Emofi relies on protocol-defined fair pricing logic for risk checks, rather than raw transient prints alone. This helps maintain liquidation fairness while preserving strict solvency protection.

PnL and State Transitions

• Unrealized pnl changes while positions remain open.

• Realized pnl crystallizes through reductions/closures.

Funding and fees influence net outcomes and should be included in total strategy evaluation.

Deterministic Enforcement

Position accounting, margin checks, settlement updates, and risk-triggered actions are governed by explicit protocol rules. Deterministic behavior improves transparency, supports integration reliability, and allows users to reason about system responses under stress.