Cross-Margined by default
Universal Cross Margin at Based Markets
Maximize your trading efficiency with generalized cross-margined accounts at based markets.
IMPORTANT NOTE FOR CROSS-MARGIN AND LIQUIDATIONS
Your WHOLE SUBACCOUNT WILL BE LIQUIDATED if one positions negative uPnL is greater than all your other positions positive uPnL and your remaining margin. uPnL + allocatedMargin (to this subaccount) < maintenance margin
= whole subaccount liquidated There is also NO LIQUIDATION PRICE PER POSITION as all positions across your subaccount are in cross-margin and the uPnL is aggregated among all of them.
Learn more about cross margin in general
Differentiating Between Isolated and Cross-Margin
Isolate your accounts at your convenience by creating subAccounts.
Each sub account in Based is isolated, but all positions inside a based sub account are in cross margin.
Isolated Margin
Isolated Margin Often used in highly fluctuating speculative positions, isolated margin limits a user's risk to the funds in their account. This technique is frequently found in perpetual trading across decentralized (DEXs) and centralized exchanges (CEXs).
Example: Bob has 30K USDC on Coinbase. He opens a $ETH perpetual position worth $75K on 8X leverage, using 6K of his EUR as collateral. If Bob's position is liquidated, only the 6K EUR initial margin is at risk. His remaining 24K EUR stays intact.
Important Note: Isolation is still possible via based.markets
On Based Markets Cross-Margin is the Default setting, but users are also able to isolate their trades, Users can take advantage of isolated markets by initiating a subaccount, where trades are exclusively conducted in cross within that specific subaccount instance. To segregate an individual trade, users must open a fresh subaccount and establish their new position using that newly created subaccount.
Cross-Margin
Cross-margining is a method that calculates the total Profit and Loss across several trades in a portfolio, enabling users to reduce the margin requirements for each position significantly. By adopting this strategy, the chances of liquidations for individual positions are lessened, and the initial margin needed for each trade is lowered or even zero. This practice is widespread in Traditional Finance (TradFi) and is utilized on numerous centralized exchanges (CEXs), but its application is limited within Decentralized Finance (DeFi).
In based.markets, all your assets that you deposited, all your open positions, and their profit and loss (PnL), are accessible for your margin.
Example: Charlie has 40K USDT on Kraken. He opens a $LTC perpetual position worth $50K on 5X leverage, using a cross-margin account.
He also opens a $ETH perpetual short position worth $50k on 5X leverage
In a cross-margin scenario, all of Charlie's 40K USDT serves as collateral for the position. If the market moves against Charlie's positions significantly, his entire 40K USDT balance is at risk, and he could face total liquidation.
Portfolio Managing strategy and tokenized portfolios
Based markets also implement a portfolio margining strategy. Similar to conventional cross-margining, portfolio margining is where unrealized gains can balance unrealized losses or serve as margin for existing or new positions. These balancing acts are automatically computed via the watchdog network as well as the muon network and are intuitively presented as the trading account's portfolio health on the based markets frontend.
In SYMM v1.0 subaccounts and therefore cross-margin portfolios can be tokenized as NFTs moved between accounts, used as collateral, sold to other users or even tokenized as ERC20s!
Cross margin on Based Markets unleashes Capital Efficiency
based.markets utilizes a cross-margining system as a standard feature, a user's sub-trading account can merge obligations to equilibrate the margin among different positions. In this specific subaccount, a user's entire array of open positions & their remaining USD balance acts as collateral for all their active trades.
In based.markets, the full portfolio itself becomes the margin.
This method, which allows for universal cross-margining across trading accounts, is an uncommon practice in Decentralized Finance (DeFi), highlighting the importance of distinguishing between two main types of margin:
Isolated Margin
Cross-Margin
Isolated Margin refers to a system where the liability is confined to the initial margin allocated to a single trade.
Cross-Margin involves the merging of obligations from various trades within an account to evenly distribute the margin across those positions.
Advantages of Universally Cross-Margined Accounts on Based Markets
Lower Margin Requirements: Cross-margined accounts often require less margin compared to isolated margin accounts for similar positions.
Automatic Risk Management: Based markets facilitate avoiding liquidations by auto-calculating and transferring margins to maintain necessary levels.
Risk/Reward Optimization: Traders can modify their leverage across multiple positions to suit individual risk preferences. It's more capital-efficient.
Portfolio Margining: Unrealized profits from one position can offset the margin needs of another, promoting capital efficiency.
Simplified Account Management: All risk indicators and portfolio health are consolidated into one interface at based markets, making trading with multiple open positions seamless.
Managing Portfolio Risk on Based Markets
Managing your portfolio on based markets is simplified with a comprehensive view of your cross-margined trading account.
Various risk tiers are displayed visually within the “Account Overview” of the portfolio page, based displayed as emojis indicating your account health.
Based markets automatically perform calculations of, Equity, Maintenance Margin and uPNL as Weighted Value (e.g., portfolio health) and reflect them on the portfolio overview page.
Conclusion
Take advantage of portfolio margining with based markets. Manage one universal margin account comprising all your balances and positions to optimize capital efficiency—no more switching between accounts. Or create infinite subaccounts with different hedging strategies portfolios and an abundance set of endless possibilities how to manage your trades!
With based markets, your portfolio isn’t just a variety of assets; it can literally be tokenized.
it's an integrated margin account that opens unlimited potential & a new way of trading onchain. Universally cross-margined accounts on based markets offer a path to more sophisticated, retail, and opportunistic trading experiences.
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