a) How changes in asset value affects the trade
The exchange that should happen on Day 2 (the second leg of the Repo transaction) is shown below
But changes to the Asset value (Vn) between Day 1 and Day 2 impacts both the Repo Trader and the Counterparty. If Vn > P1 + Collateral, then the Counterparty would not return for the second leg. If Vn < P2, then the Repo Trader would not return.
This can be solved by monitoring Vn and settling the transaction when Vn is in danger of breaching these upper and lower triggers.
b) How is this implemented at SorareFi
SorareFi monitors the RTEV of the Card(s) and takes actions to force settle the transactions if needed.
But since Sorare Card(s) are thinly traded, instead of a price trigger — SorareFi assigns ‘Zone(s) of Danger’ and takes action if the Card values land up in these Zones.
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