Portfolios

Portfolios are risk boundaries of assets & liabilities

Every collateral and debt belongs to a specific Concordia portfolio. A portfolio is the basic risk perimeter for a set of positions. The portfolio is a unit that is appraised as a whole:

• A portfolio can take on new debt only if its set of collaterals can support it.

• All of a portfolio's collaterals are cross-collateralized. If a portfolio is forcefully closed-out due to its risk quantity, any of the collaterals within a portfolio may be seized in order to rebalance its debts.

Concordia portfolios give users an ability to separate their various positions into isolated groups. A single Concordia profile can have arbitrarily many portfolios. For instance, a certain user may wish to separate out a portfolio of long-term, low risk holdings from a different one that they use for high-frequency daily trades.

Portfolio structure

A portfolio is simply a set of collaterals and liabilities. The difference in market value between these amounts the equity in a portfolio.

The specific allowed types of collaterals and liabilities are determined by the collateral basket that the portfolio is attached to. At creation, every portfolio selects from available collateral baskets, and the chosen basket determines which collateral types the portfolio may use. Since loan brokers also select a specific basket, the mutual basket in common between portfolios and brokers determines which liabilities a portfolio can take on.

Example

There is a small collateral basket that includes:

• USDC

• BTC

• ETH

There are 2 brokers that employ this collateral basket:

• DOGE

• SOL

A portfolio elects to assign itself to this basket. This decision means the portfolio is locked in to only depositing collaterals USDC, BTC, and ETH. It can only take out loans from brokers that also use this basket. At this moment, the portfolio can only take on debt in DOGE and SOL.

Portfolio risk

As a portfolio contains the pot of collateral that secures its set of liabilities, each portfolio carries a quantity of risk. The amount of risk attributed to a portfolio is a tantamount to a minimum amount of equity the portfolio must have in order for it to continue with its open positions. If a portfolio's equity falls beneath the risk threshold, the portfolio may enter into forced close-out.

Managing the health of portfolio by paying down debts or adding collateral is the owner's responsibility. If at any point the portfolio does not meet its equity requirements, the Concordia network may automatically begin closing out the portfolio's debts in exchange for seizing a portion of the portfolio's collateral.