Borrowing Fee

Moda Trade identifies traders as mUSDT Vault’s borrowers. mUSDT Vault only charges the major positions (long/short) borrowing fees based on the open position balance. The borrowing fees are paid to mUSDT Vault as negative PnL.

Borrowing APR represents the borrowing fees charged on a specific trading pair or a group of related trading pairs at 100% vault utilization (Net Open Interest = Vault Total Value Locked).

Borrowing APR = volFactor / Max Vault Exposure % * marketFactor

Borrowing APR is positively correlated with the volatility factor.

volFactor = (dailyVolatility * 365) ^ 1.25 / 150

dailyVolatility=(3*Avg_daily_ATR%_1_Days+2*Avg_daily_ATR%_7_Days+Avg_daily_ATR%_30_Days ) / 6

Daily ATR % is a technical indicator that measures the daily percentage movement of an asset.

Based on historical trading data, the maximum vault risk exposure is set at 20%.

The market coefficient is 1 across all trading pairs, and for a group of assets, proportional to the correlation of trading pairs within the group, the coefficient is 0-1, approaching 0 as the correlation is lower.

Borrowing Fee can reduce the gap between long and short open positions, allowing the expansion of larger OI without a corresponding demand in Vault TVL.