How Does ‘Leveraged Trading’ in Perpetual Swaps Amplify Risk for a DAO?

Leveraged trading allows a DAO to control a large position with a small amount of collateral. While it amplifies potential gains, it also significantly amplifies potential losses.

A small adverse price movement can lead to the DAO's collateral being liquidated entirely, resulting in a total loss of the initial margin. This is a high-risk activity that can rapidly deplete the treasury's capital.