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Leverage in Mimicry is unique, in that, players can never go into debt and there is never any need for the system to manage liquidations.
When Actors open positions with leverage L, their Mime’s position size s, will equal their deposited capital c, multiplied by their selected leverage between an integer range of 1-30.
s=cLs = c * L
Levered positions respond to Pantomime reference-price changes in accordance with their leverage.
For example: Let’s assume the True Odds within a hypothetical market are 1:1. A bullish Mime with a $1,000 worth of tokens, previously opened by Alice using 5x leverage, will impact the skew as if $5,000 worth of collateral was deposited on the bullish side of the market. Accordingly, a 10% change in the reference price in this hypothetical example would yield a gain of $500.
The leveraged size of a position will be used when calculating exit fees. So assuming a 0.5% exit fee for the hypothetical Pantomime above, Alice would pay the protocol $27.50 worth of tokens to close her position. The value returned to Alice would be her original deposit of $1,000, plus $472.50 in profits.