Adaptive Leverage Limits

Adaptive leverage limits are caps on the amount of leverage a user can take that change based on market conditions or the user's portfolio risk. In a calm market, higher leverage might be allowed, but as volatility increases, the protocol may lower these limits to reduce systemic risk.

This proactive approach prevents users from over-leveraging when the market is at its most dangerous. It helps keep the overall protocol exposure within manageable bounds.

This is a key tool for maintaining the health of derivative platforms that offer high-leverage products.