How Does a 'Vault' Contract Manage Collateral for Multiple Derivative Positions? ⎊ Path

How Does a ‘Vault’ Contract Manage Collateral for Multiple Derivative Positions?

A vault contract acts as a central repository for users' assets, pooling collateral to back various derivative positions, such as options or futures. It tracks each user's contribution and their corresponding liabilities.

By pooling collateral, it can often achieve better capital efficiency and simplify the management of margin across multiple trades. The contract logic ensures that collateral is correctly allocated and only used to cover the associated liabilities.

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Glossar

Vault

Custody ⎊ A vault, within cryptocurrency and derivatives, represents a secure mechanism for holding digital assets, functioning as a specialized form of custody where private keys are managed to mitigate counterparty risk.