# Dynamic Leverage Framework

The maximum leverage offered for any market is not static; it is recalculated continuously based on two independent risk factors. The max leverage&#x20;

&#x20;      ![](https://788773440-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FAZF2BfymkD55xR0Nid8e%2Fuploads%2FJMQd7A7ieE8cLzRU5Ssd%2FScreen%20Shot%202025-06-24%20at%205.44.44%20PM.png?alt=media\&token=f1aacf47-1f7a-4f85-8adb-a53c4da4e664)

&#x20;    is the minimum of:

The Volatility Cap:\
&#x20;     ![](https://788773440-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FAZF2BfymkD55xR0Nid8e%2Fuploads%2FORk3hDrCp2YZXk8966as%2FScreen%20Shot%202025-06-24%20at%205.45.22%20PM.png?alt=media\&token=c85a881b-976c-422c-b0b5-80775bcfc3bb)

A per-market limit calculated from the historical volatility of the underlying rate. It ensures a trader's margin can cover a worst-case (99% VaR) move.

The Liquidity Cap: \
&#x20;       ![](https://788773440-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FAZF2BfymkD55xR0Nid8e%2Fuploads%2FP2gMeImggWoYrYlcNhgR%2FScreen%20Shot%202025-06-24%20at%205.46.13%20PM.png?alt=media\&token=0b3e7d0a-3b47-435a-af66-bf9659e6c360)\
A platform-wide limit that ensures the protocol's total loss-absorption capacity (LP Vault + Insurance Fund) is sufficient to cover an aggregate worst-case loss across all open positions.

This dual-cap system ensures that leverage is extended responsibly, aligning risk with the protocol's real-time capacity.

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