As mentioned earlier, when adding liquidity, half of the tokens is used as Quote, and the other half to synthesize sAMM's LONG position. In order to hedge sAMM's LONG position, LP will passively be assigned the same amount of short position after providing liquidity.

Thus, when adding liquidity, an LP automatically also becomes a trader with a SHORT position. To ensure the safety of the LP account’s SHORT position, the LP should at the same time have margin available in its account to at least meet the initial margin requirement of the synthetic position. The leverage ratio parameter is used to specify the leverage of the SHORT hedge position.

To simplify the process, SynFutures Dapp combines the process into one click, so when you add x*x* amount of Quote asset, the amount would be divided into three parts:

(1) y*y* position size would be supplied as the Quote assets

(2) y*y* position size would be synthesized into the Base assets

(3) The rest would become the margin of your short position, which could be calculated as y \times \frac{\text{InitialPrice}}{\text{LeverageRatio}}*y*×LeverageRatioInitialPrice.

The relationship between each parameter and size is:

x = 2 \times y \times \text{\small{InitialPrice}} + y \times \frac{\text{InitialPrice}}{\text{LeverageRatio}},*x*=2×*y*×InitialPrice+*y*×LeverageRatioInitialPrice,

or, y = x / \left(2 \times \text{\small{InitialPrice}} + \frac{\text{InitialPrice}}{\text{LeverageRatio}} \right).*y*=*x*/(2×InitialPrice+LeverageRatioInitialPrice).