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Stands for Credit Value Adjustment, similiar to Maintenance Margin.
CVA stands for (Credit Value Adjustment) which is an important metric within the SYMMIO platform, bearing a close resemblance to the "Maintenance Margin" concept that traders might be familiar with from exchanges like Binance. Counterparty asks for as a "Security Deposit" in the form of CVA in case the Buyer gets Liquidated.
The significance of CVA lies in its role in delineating the threshold at which a user enters into the Liquidation Process. It's crucial to understand that the CVA is a value stipulated by the hedger, and the SYMMIO platform itself does not mandate a specific CVA amount. This distinction underscores the flexibility and the user-centric approach adopted by SYMMIO in accommodating varying hedger requirements and market strategies.
Learn more about CVA in the Technical documentation
In the current SYMM version a Solver streams his CVA requirements to the frontend provider and those serve the desired CVA to the User, so the User can send a request with sufficient CVA to the contracts for the Solver to accept.
Both parties, PartyA (User) and PartyB (Solver) provide an equal Security Deposit.
In Case that the Solver gets Liquidated the User receives the Security Deposit as a reparation for the premature closing of their position. This CVA amount also makes it attractive for other parties to buyout the Counterparty at a Discount so the Users trade is continued without interruptions. Read more about Solver Buyouts
In Case that the User gets Liquidated CVA is used to protect counterparties from risk of prematurely closing their Positions as it means they have to close their Hedging Positions which could incur slippage or other issues that could lead to a loss on the Solver side. While CVA is meant as a Security measure for Solvers to cover the Risk of Loss in case of prematurely closing them efficient Solver systems can also create a substantial source of income through CVA, learn more:CVA makes up most of the Solvers profits
Learn more about the Example Solver CVA settings (DEMO-Solver: Rasa Capital)
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