Margin System

Margin Modes

• Cross margin: all cross-margined positions draw from shared account collateral
• Isolated margin: margin is allocated per position; losses are bounded to the assigned margin

Collateral Modes (Portfolio Level)

Margin mode (cross vs. isolated) is orthogonal to collateral mode (which assets count toward margin balance):

• USDC-only: only USDC balance contributes to collateral
• Multi-collateral: multiple assets contribute, each discounted by a per-asset collateral ratio (haircut)

Multi-Collateral Haircuts

In multi-collateral mode, each asset's contribution is determined by:

• Market value (pre-haircut)
• Collateral value (post-haircut)
• Portfolio weight

For each asset:

$$\text{Collateral Value}_i = \text{Market Value}_i \times \text{Collateral Ratio}_i$$

And total usable collateral is:

$$\text{Total Usable Collateral} = \sum_i \text{Collateral Value}_i$$

Core Requirements

Initial margin (IM) — collateral required to open or increase a position:

$$\text{IM Requirement} = \sum_i \left(\text{Notional}_i \times \text{IM Rate}_i\right)$$

Maintenance margin (MM) — minimum collateral to hold a position before liquidation triggers:

$$\text{MM Requirement} = \sum_i \left(\text{Notional}_i \times \text{MM Rate}_i\right)$$

Account States

1. Healthy

$$\text{Margin Balance} \ge \text{IM Requirement}$$

2. Reduce-only state

$$\text{IM Requirement} > \text{Margin Balance} \ge \text{MM Requirement}$$

3. Liquidation eligible

$$\text{Margin Balance} < \text{MM Requirement}$$

Account Health Metrics

Beyond IM/MM checks, OBSDN exposes operational health metrics for monitoring:

• Cross maintenance-margin ratio
• Initial-margin health factor
• Margin utilization
• Free collateral available for new risk

Cross accounts become liquidation-eligible when maintenance usage reaches 100%.

Operational Behavior by State

• Healthy: full trading actions allowed
• Reduce-only: risk-increasing actions blocked
• Liquidation eligible: open-order cancellation and liquidation process start

Isolated Position Notes

In isolated mode, only the margin allocated to a specific position is at risk. A liquidation on an isolated position does not draw from the account's cross-margin balance.

Related

• Liquidations
• Risk Parameters