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Concentration limits are the guardrails Nexio enforces to prevent overexposure to any single borrower, strategy, or geography. If one trading firm borrowed across several Series, or if most Series funded the same strategy, a market shock could impact the whole platform. Concentration limits prevent that. Once capital is allocated to a borrower’s Series vault, the borrower can freely deploy those funds within that Series according to its approved strategy parameters. Concentration limits only apply at the platform level (governing total exposure across borrowers, strategies, and regions), not restricting how an approved borrower uses BTC already allocated to their Series.

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How Concentration Limits Work

Nexio applies multiple independent concentration layers, each continuously monitored by the risk engine and the governance committee. These include:
  • Borrower caps: Limit the maximum share of total platform exposure attributable to a single borrower across all Series.
  • Strategy caps: Limit total active capital allocated to any single trading strategy (e.g., CME Basis, Market-Making).
  • Geographic caps: Control regional exposure to exchanges or jurisdictions with correlated risk.
  • Liquidity floors: Require each Series to keep a minimum percentage unallocated to support redemptions under stress.
The system constantly tracks how capital is distributed across borrowers, strategies, and regions, automatically halting new draws or reallocations if any threshold is approached.

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Example: Classification Limits

As an example, let’s assume an active Series has 1,000 BTC total. Concentration limits would ensure:
  • No single borrower controls a disproportionate share of total exposure.
  • No single strategy dominates overall capital deployment.
  • Sufficient liquidity remains unallocated for redemptions even under adverse conditions.
This layered structure keeps Series utilization diversified and ensures lenders can redeem even if one borrower, strategy, or region experiences stress.