Risk Mitigation

We acutely recognize the balance needed to achieve an appropriate degree of risk mitigation for our liquidity providers, traders, and the vault. We perform regular risk tolerance assessments based on market volatility, asset performance (per side), and historical trading data in an attempt to maintain a fair and equitable Navigator trading ecosystem for all users. NSLP price performance and trading profit/ loss are two of the most crucial areas to balance within the platform. We have provided a minimal interference approach to ensure that all trading is done so honestly and strategically, without manipulation. Our current risk mitigation contract rules are as follows:

Max Minting Limit

Contract operators within the Navigator team may set a maximum amount of NSLP minted per block in order to prevent potential flash loan attacks. A flash loan attack occurs when a bad actor uses unsecured loans from DeFi protocols to manipulate the price of an asset (or several) for their own benefit.

Minimum Profit Duration

The Minimum Profit Duration is the minimum amount of time a position must be held before it can be closed for a profit. Users can only close their position after 420 seconds (7 minutes) if their profit is equal to or greater than their collateral, or if the profit is above $1000.

For example:

• If you open a long BTC position with $100 collateral and make a $100 profit, you cannot close the position immediately. It must be held for 420 seconds before closing.

• However, if you open a long BTC position with $2000 collateral and make a $100 profit, you can close the position immediately. In case you make a $1005 profit, you cannot close the position immediately because the profit exceeds to the $1000 threshold. Then it must be held for 420 seconds before closing.

This rule helps prevent harmful trades that leverage market manipulation, which often result in large profits in a very short amount of time (typically less than 10 seconds). If the profit is below this range, it can be closed at any time without being affected by the duration.

Close Delta Time

The Close Delta Time is the minimum amount of time a position must be held before it can be closed regardless of the user's profit amount. Users can only close their position after 60 seconds (1 minute) after their last open or increase action.