Margining

Ethereal uses cross-margining as the default for all positions. While the platform's subaccount system is designed to support both cross and isolated margin modes, isolated margin functionality is not yet available in the current app version.

Initial Margin Requirements

When opening a position, you must meet the initial margin requirement based on the market's maximum leverage, which is set at the market level and can be checked in the market details page. The initial margin calculation follows the formula:

$$\text{initial\_margin} = \frac{\text{position\_size} \times \text{mark\_price}}{\text{leverage}}$$

For example, with 3x leverage on a 1 ETH position at $3,000 mark price, the initial margin required would be 1 * 3000 / 3 = 1000.

Maintenance Margin

Maintenance margin represents the minimum equity threshold that must be maintained to avoid liquidation. Each market has its own maintenance margin fraction, calculated as:

$$\text{maintenance\_margin} = \frac{1}{\text{max\_leverage} \times 2}$$

For the BTC-USD market with 50x max leverage, this results in a 1% maintenance margin fraction, meaning you must maintain equity of at least 1% of your total open notional position.

Liquidation Process

Positions are liquidated when the mark price from Pyth Lazer oracle causes equity to fall below maintenance margin. The insurance fund and liquidator subaccount handle liquidations to prevent socialized losses, while a "first bankruptcy price" cap prevents accounts from being pushed into negative equity by extreme price movements. Refer to the liquidations section to learn more.