Margin Regimes: Who Pays When It All Goes Wrong?
Same positions, same crash. Different margin regimes, very different outcomes.
Price scenario:
BTCLONG 10x
$100k notional
Entry $100k
UPnL: $0
Standalone IM: $10k
ETHSHORT 10x
$100k notional
Entry $4,000
UPnL: $0
Standalone IM: $10k
SOLLONG 5x
$100k notional
Entry $180
UPnL: $0
Standalone IM: $20k
No hedge recognition
↓ margin flows into ↓
Collateral Required
$40k
100% of standalone IM
Isolated
$40k
No offsets. Full IM per market.
Cross
$18k
Shared pool. Implicit netting.
Hybrid
$25k
Spread credits + sweeps. Silos kept.
Scenario: All 3 markets crash 40%
Green (BTC Winner)
Short BTC, $50k collateral
Owed $60k profit after crash
Owed $60k profit after crash
Blue (ETH Winner)
Short ETH, $50k collateral
Owed $40k profit after crash
Owed $40k profit after crash
Purple (SOL Winner)
Short SOL, $50k collateral
Owed $70k profit after crash
Owed $70k profit after crash
Red (Big Loser)
Long BTC + Long ETH + Long SOL
$50k collateral per market. Owes $170k total. Has $150k. $20k shortfall.
$50k collateral per market. Owes $170k total. Has $150k. $20k shortfall.
Crash order:
Isolated Margin
Per-market silos. No insurance fund sharing. Each market stands alone.
Final Payouts
Press "Simulate Crash"
Cross Margin
Single shared pool of $300k. Red's $150k is not siloed.
Final Payouts
Press "Simulate Crash"
Hybrid Margin
Per-market silos ($100k each). Insurance fund + global overflow.
Final Payouts
Press "Simulate Crash"
Try shuffling the crash order. In Cross Margin, the sequence determines who gets paid. In Hybrid Margin, the waterfall absorbs shortfalls deterministically regardless of order.