# Limit of Followers' Equity in a Strategy

## Individual Limit on the Following Equity in a Strategy

There is a limit on how much Initial Equity a Follower may have in *one* Strategy.

Currently, one Follower may allocate **up to 0.1 BTC** of initial capital to any separate BTC-denominated Strategy. It can be one Following of 0.1 BTC as well as multiple Followings of the same Strategy, not exceeding 0.1 BTC in total.

Individual following limit for a COV, ETH, USDT, or USDC-denominated strategy is 10,000 COV, 2.5 ETH, 5,000 USDT, or 5,000 USDC respectively.

There is no limit on how many *different* Strategies a Covesting user can follow with a maximum of 0.1 BTC for each separate Strategy.

{% hint style="success" %}
Individual Following's limit in a Strategy can be extended or removed completely by activating a COV Membership via [COV token staking](https://primexbt.gitbook.io/help-center/cov/cov-token-utility).
{% endhint %}

{% hint style="info" %}
The Individual Limit is intended to reduce exposure of copy-trading Followers to specific Strategies, thus minimizing overall risks by diversifying their Portfolio.

At the same time, it opens an opportunity for more Followers to join successful Strategies and benefit from their performance, by preventing such Strategies from being completely occupied by a few large Followers leaving no room for other Covesting users to join.
{% endhint %}

## Max IFE (initial followers' equity cap)

One of the key characteristics of a Strategy is its **Followers Equity** and **Initial Follower’s Equity (IFE)**.\
\
**Followers’ Equity** is the current total value of all active followings of the Strategy, before profit distribution.

**IFE** (Initial Followers’ Equity) is the total initial amount of all active followings of the Strategy. There is a limit to how much total **IFE** can follow any particular Strategy.\
\
Let's take a more detailed look at IFE and how it works.

Large Equity volumes following the same trading Strategy bear multiple market risks. The **IFE cap** (initial followers' equity cap) is intended to address them:

* Reduce risks of market volatility and drastic price changes induced by larger trading volumes;
* Limit possible losses in Strategies whose managers do not implement proper risk and money management;
* Encourage Covesting users to diversify their portfolios and risks.

{% hint style="info" %}
The cap is imposed on total **IFE** and is based on the [**Grade**](#strategy-grades) of a Strategy.
{% endhint %}

The **Followers' Equity cap** means that if current **IFE** of a Strategy is equal to or exceeds the **cap,** no new Followings can be started for that Strategy.

If total **IFE** falls below the **cap** due to followers stopping their followings of the Strategy, new followers can then begin following that Strategy until the IFE reaches the **cap**.

### 📝 **Examples of IFE:**

Let's consider the following examples of a **Grade 5** Strategy capped at **20 BTC:**

**1.** The Strategy has **100** Followers with a total **IFE** of **19 BTC:**

* A Follower with **1 BTC** can start a new Following of the Strategy;
* A Follower with **2 BTC** cannot start a new Following, because **IFE** would exceed 20 BTC if they started the following.

**2.** The Manager made a **20%** profit in the Strategy. This led to a Followers’ Equity increase from **19 to 22.8 BTC**. However, the **IFE** is still **19 BTC**, because Followers didn’t stop or start new Followings:

* The Followings that started before this will continue following the Strategy. A Follower can stop their following at any time\*\*;\*\*
* A Follower with **1 BTC** can still start a new Following of the Strategy;
* A Follower with **2 BTC** cannot start a new Following, because **IFE** would exceed 20 BTC if they started the following.

**3.** Some Followers decided to book their profits and stopped following the Strategy.

A total Equity of **2.28 BTC** in 10 followings was stopped, the profits and success fees were distributed to the Followers, the Manager, and the platform. The remaining **current** Followers’ Equity is now **20.52 BTC** and the remaining **IFE** is **17.1 BTC** from 90 active followings:

* New Followers can follow the Strategy until the IFE reaches 20 BTC.
* A Follower with **2 BTC** can now start a new Following, because the **IFE** would then be **19.1 BTC** and would not exceed 20 BTC if they started the following.

## Strategy Grades

**Strategy Grades** reflect a Strategy's current IFE cap, based on the amount of personal Equity locked in a Strategy by the Manager. In essence – the more personal capital a Manager has at stake in their Strategy, the higher their IFE cap will be.

Strategy grading is intended to ensure that Managers exercise caution and responsibility towards Following Equity. It prevents the appearance of a huge gap between a Manager's own capital in a Strategy and the Followers' Equity. It makes it impossible for Managers to have hundreds of thousands of dollars in Followers' Equity while risking only a few hundred dollars of their own capital.

There are **11 available Strategy Grades\*** based on the amount of Equity locked by a Strategy Manager:

<table data-header-hidden><thead><tr><th width="166.57888762769582">Strategy Grade</th><th>Initial Follower's Equity (IFE) cap</th><th>Manager's Equitylocked**</th></tr></thead><tbody><tr><td>Strategy<br>Grade</td><td>Initial Follower's<br>Equity (IFE) cap</td><td><p>Manager's Equity</p><p>locked**</p></td></tr><tr><td><strong>Default ('0')</strong></td><td><p>20,000 COV</p><p>0.2 BTC</p><p>5 ETH</p><p>10,000 USDT/USDC</p></td><td><p>1,000 COV</p><p>0.01 BTC</p><p>0.14 ETH</p><p>200 USDT/USDC</p></td></tr><tr><td><strong>1</strong></td><td><p>100,000 COV</p><p>1 BTC</p><p>25 ETH</p><p>50,000 USDT/USDC</p></td><td><p>5,000 COV</p><p>0.05 BTC</p><p>3.25 ETH</p><p>2,500 USDT/USDC</p></td></tr><tr><td><strong>2</strong></td><td><p>300,000 COV</p><p>3 BTC</p><p>75 ETH</p><p>150,000 USDT/USDC</p></td><td><p>15,000 COV</p><p>0.15 BTC</p><p>3.75 ETH</p><p>7,500 USDT/USDC</p></td></tr><tr><td><strong>3</strong></td><td><p>700,000 COV</p><p>7 BTC</p><p>175 ETH</p><p>350,000 USDT/USDC</p></td><td><p>35,000 COV</p><p>0.35 BTC</p><p>8.75 ETH</p><p>17,500 USDT/USDC</p></td></tr><tr><td><strong>4</strong></td><td><p>1,500,000 COV</p><p>15 BTC</p><p>375 ETH</p><p>750,000 USDT/USDC</p></td><td><p>75,000 COV</p><p>0.75 BTC</p><p>18.75 ETH</p><p>37,500 USDT/USDC</p></td></tr><tr><td><strong>5</strong></td><td><p>2,000,000 COV</p><p>20 BTC</p><p>500 ETH</p><p>1,000,000 USDT/USDC</p></td><td><p>100,000 COV</p><p>1 BTC</p><p>25 ETH</p><p>50,000 USDT/USDC</p></td></tr><tr><td><strong>6</strong></td><td><p>4,000,000 COV</p><p>40 BTC</p><p>1,000 ETH</p><p>2,000,000 USDT/USDC</p></td><td><p>200,000 COV</p><p>2 BTC</p><p>50 ETH</p><p>100,000 USDT/USDC</p></td></tr><tr><td><strong>7</strong></td><td><p>6,000,000 COV</p><p>60 BTC</p><p>1,500 ETH</p><p>3,000,000 USDT/USDC</p></td><td><p>300,000 COV</p><p>3 BTC</p><p>75 ETH</p><p>150,000 USDT/USDC</p></td></tr><tr><td><strong>8</strong></td><td><p>8,000,000 COV</p><p>80 BTC</p><p>2,000 ETH</p><p>4,000,000 USDT/USDC</p></td><td><p>500,000 COV</p><p>5 BTC</p><p>125 ETH</p><p>250,000 USDT/USDC</p></td></tr><tr><td><strong>9</strong></td><td><p>11,000,000 COV</p><p>110 BTC</p><p>2,750 ETH</p><p>5,500,000 USDT/USDC</p></td><td><p>1,000,000 COV</p><p>10 BTC</p><p>250 ETH</p><p>500,000 USDT/USDC</p></td></tr><tr><td><strong>10</strong></td><td><p>Unlimited COV</p><p>230 BTC</p><p>5,750 ETH</p><p>11,500,000 USDT/USDC</p></td><td><p>2,000,000 COV</p><p>20 BTC</p><p>500 ETH</p><p>1,000,000 USDT/USDC</p></td></tr><tr><td><strong>11</strong></td><td><p>Unlimited COV</p><p>320 BTC</p><p>8,000 ETH</p><p>16,000,000 USDT/USDC</p></td><td><p>3,000,000 COV</p><p>30 BTC</p><p>750 ETH</p><p>1,500,000 USDT/USDC</p></td></tr></tbody></table>

*\* Strategy Grades and their corresponding conditions are subject to change.*\
\&#xNAN;*\*\* Manager's Equity may be locked at a* [*higher withdrawal limit*](#managers-equity-locked-in-a-strategy) *if the current Followers' Equity exceeds a certain amount.*

{% hint style="warning" %}
PrimeXBT reserves the right to request a manager to pass additional verification, including but not limited to a KYC check and providing proofs of relevant experience for assessment, prior to changing a Strategy's Grade/Equity limits.
{% endhint %}

### 🏁 Initial Grade of a Strategy

Upon creation of a Strategy, it is assigned **Default ('0') Grade**. This means that for a Strategy in a respective currency:

* The Manager's Equity is locked at **1,000 COV / 0.01 BTC / 0.14 ETH / 200 USDT / 200 USDC;**
* **IFE** is set at **20,000 COV / 0.2 BTC / 5 ETH / 10,000 USDT / 10,000 USDC** respectively, depending on the Strategy's currency;

A Strategy's **grade will be automatically upgraded to Grades 1, 2, 3 and 4** should the Manager's Equity reach the corresponding amounts (see table above).

Changing a Strategy's Grade to 5 or higher requires manual processing by the PrimeXBT team (subject to change in future updates). If a Manager wants to upgrade a Strategy to Grade 5 or higher to increase IFE cap accordingly, they should follow the procedure [below](#upgrading-a-strategy).

### 🔒 **Manager’s Equity Locked in a Strategy**

In order to align the interests of Followers and Strategy Managers in the best possible way, an additional restriction on Manager’s Equity is applied in relation to the total Followers’ Equity in a Strategy:

* If the current Followers’ Equity in a Strategy increases due to the Strategy’s performance and exceeds the IFE cap corresponding to a higher Strategy grade, the amount of Manager’s Equity in a Strategy will be *automatically* locked at a higher Grade withdrawal limit.\\
* However, the Strategy’s Grade does not increase automatically. This means that the *IFE* will remain limited to the original Strategy’s grade unless a Manager [upgrades](#upgrading-a-strategy) their Strategy.\
  To extend the IFE cap, a Manager should contact our support team via live chat<img src="https://1941544518-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2F-LfK-HdU-XXoT_wVnrCz%2Fuploads%2Fgit-blob-0e3e70b3fe0d91bbb24fbb8baeca70b623877f69%2FLiveChat_Intercom.png?alt=media" alt="" data-size="line"> or email <support@help.primexbt.com> and request a Strategy upgrade.\\
* If the Followers’ Equity decreases below the new cap afterwards, the newly imposed restriction on the Manager’s Equity withdrawals will not be reduced and will remain in place.\
  To release the Manager's Equity locked in a Strategy, a Manager should follow the [Strategy downgrade procedure](#downgrading-a-strategy).

{% hint style="success" %}
Strategy upgrades to Grades 1, 2, 3 and 4 are performed **automatically** should the Manager's Equity reach the corresponding amounts (see table above), and do not require manual processing.\
\
Decreasing a Strategy's grade always requires [manual processing](#downgrading-a-strategy), regardless of the current Grade of the Strategy.
{% endhint %}

The restriction on Manager's withdrawals is intended to motivate Managers of successful Strategies to upgrade their Strategies, pass an account verification (KYC) procedure, apply proper risk management techniques, and prevent the appearance of a huge gap between a Manager's own capital in a Strategy and the Followers' Equity.

The currently locked Equity in a Strategy is reflected on the [Manage Strategy](https://primexbt.com/my/covesting/manage-strategy) page:

![](https://1941544518-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2F-LfK-HdU-XXoT_wVnrCz%2Fuploads%2Fgit-blob-8497041f8d19779cacc3642a7547e2ff0fe6576f%2FLocked_Eq.png?alt=media)

### ⬆️ Upgrading a Strategy to Grade 5 or higher <a href="#upgrading-a-strategy" id="upgrading-a-strategy"></a>

**A Strategy is automatically upgraded to Grades 1, 2, 3 and 4**. If you're a Manager and you want to increase the Grade of your Strategy to level 5 or higher, the corresponding amount of the Manager’s Equity must first be locked in the Strategy. To do this:

1. Ensure that the Manager's Equity of the Strategy is sufficient for the new Grade (see the table above). Deposit additional funds if necessary;
2. **Contact our support team** via live chat<img src="https://1941544518-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2F-LfK-HdU-XXoT_wVnrCz%2Fuploads%2Fgit-blob-0e3e70b3fe0d91bbb24fbb8baeca70b623877f69%2FLiveChat_Intercom.png?alt=media" alt="" data-size="line"> or email [support@help.primexbt.com](mailto:support@help.primexbt.com?subject=Request%20to%20increase%20Strategy%20Grade) regarding the desired Grade and amount of Equity that you wish to lock in your Strategy;
3. After the Equity has been locked in your Strategy, you will receive a Strategy Grade and the IFE cap for your Strategy will increase accordingly.

### ⬇️ Downgrading a Strategy

If you're a manager and want to **decrease the Grade** of your Strategy (downgrade) to partially unlock the Manager's Equity for withdrawals:

1. **Contact our support team** via live chat<img src="https://1941544518-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2F-LfK-HdU-XXoT_wVnrCz%2Fuploads%2Fgit-blob-0e3e70b3fe0d91bbb24fbb8baeca70b623877f69%2FLiveChat_Intercom.png?alt=media" alt="" data-size="line"> or email [support@help.primexbt.com](mailto:support@help.primexbt.com?subject=Request%20to%20downgrade%20Strategy) regarding the desired Grade;
2. After the Strategy’s Grade has been lowered, your IFE cap will decrease accordingly;
3. If IFE or current Followers’ Equity exceeds the cap of the newly selected Grade, the locked Equity will **remain locked** until *both* the IFE and current Followers' Equity drop to or below the current cap.
4. As soon as *both* IFE and current Followers’ Equity drop to or below the cap in the respective grade, the Manager's Equity will be unlocked for withdrawals.
5. To **downgrade a Strategy to Grade 3 or lower**, you will need to additionally specify the amount of Manager's Equity that you want to withdraw - the requested amount will then be withdrawn from your Strategy to your Wallet and the Strategy's Grade will be decreased. *(This additional step is required in order to prevent a Strategy from automatically upgrading to Grades 1, 2, 3 or 4 in case of sufficient Manager's Equity)*

{% hint style="info" %}
Locked Equity **cannot** be immediately withdrawn. It can be withdrawn **only** after the Strategy's Grade has been decreased and the locked Equity has been unlocked (i.e. when current Followers' Equity and IFE are equal to or below the current cap).
{% endhint %}

### 📝 **Examples of Strategy Grades:**

**1.** A Manager allocates and locks **3 BTC** in a Strategy:

* The Strategy’s Grade is set to **7** and the **IFE cap** is now **60 BTC.**

**2.** The Manager makes a **10%** profit afterwards, and the Manager's Equity increases from **3 BTC** to **3.3 BTC:**

* The Manager withdraws **0.3 BTC**. The remaining **3 BTC** is locked Equity;
* Any amount of funds that would decrease the Strategy’s Equity below **3 BTC** cannot be withdrawn.

**3.** At this point, IFE is **40 BTC**. The Manager now wants to withdraw **2 BTC** from the Strategy and requests the Strategy's Grade to be decreased to **5**:

* **IFE cap** is decreased to **20 BTC;**
* Manager's Equity **will remain locked** at **3 BTC** until *both* IFE and current Followers' Equity drop below **20 BTC** due to Followers stopping their followings;
* New Followings **cannot be started** as well for this Strategy until IFE drops below **20 BTC**;

**4.** Some followers now decide to close their followings and both IFE *and* current Followers' Equity drop below **20 BTC:**

* The Manager is now able to withdraw **2 BTC** from the Strategy
* **1 BTC** remains locked in order to maintain Grade **5** for the Strategy.

### 📝 Examples of Manager's Equity Lock:

A Manager starts a Grade **2** Strategy, putting in and locking **0.1 BTC** of their own funds, with the IFE capped at **3 BTC**.

**1.** If the Followers' Equity increases to **7 BTC** due to the Strategy's performance:

* The Manager's Equity lock will be automatically elevated to **0.3 BTC;**
* The Strategy will remain at **Grade 2** - unless the Manager increases their own Equity in the Strategy to 0.3 BTC or more, in which case the Strategy will be automatically upgraded to Grade 3\*\*;\*\*
* IFE cap remains at **3 BTC**: new followings cannot be started unless the Strategy is upgraded.

**2.** If the Followers' Equity decreases back to **3 BTC** afterwards due to the Strategy's performance:

* The Manager's Equity lock will **remain** at **0.3 BTC;**
* If the Manager would like to unlock their Equity, they should contact the support team with a request. The Manager's Equity will be unlocked if *both* IFE and current Followers' Equity are **3 BTC or less** as required by Grade 2.

{% hint style="success" %}
To change a Strategy's Grade, simply contact our support team via 24/7 live chat<img src="https://1941544518-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2F-LfK-HdU-XXoT_wVnrCz%2Fuploads%2Fgit-blob-0e3e70b3fe0d91bbb24fbb8baeca70b623877f69%2FLiveChat_Intercom.png?alt=media" alt="" data-size="line"> or by email at [support@help.primexbt.com](mailto:support@help.primexbt.com?subject=Request%20to%20change%20Strategy%20Grade)
{% endhint %}
