# Collateral & Cross-Margin Accounts

In the intent-based system, cross-margining lets you use your whole portfolio as collateral for multiple trades. Instead of each trade needing its own margin, your gains and losses balance across positions. This makes your capital work more efficiently, giving you more flexibility and reducing the risk of liquidation.

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**Note:** Isolated margin accounts will be introduced in future versions. To isolate margin currently, traders can create single-position sub-accounts.
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**Understanding Collateral**

* **USDC Deposits:** To initiate trades, users must deposit USDC as collateral. This deposit ensures that there are sufficient funds to cover potential losses during trades.
* **Solver Collateral:** In bilateral trade agreements, solvers are also required to deposit an equivalent amount of collateral. This ensures symmetry between both parties, guaranteeing that both are equally committed to the trade.
* **Credit Valuation Adjustment (CVA):** CVA applies as a penalty in the event of liquidation. It is paid to the non-liquidated party and serves as both an incentive to maintain balanced positions and a form of liquidation protection.

#### Understanding Margin Types

**Isolated Margin**

* Limits risk to the margin posted for a single position.
* Ideal for speculative or high-volatility trades.
* Used in perpetuals trading to prevent losses from spreading across an account.

**Cross-Margin**

* Shares collateral across multiple positions in an account.
* Profits from one trade can help maintain margin for another.
* Reduces liquidation risk and lowers margin requirements by managing risk at the portfolio level.

#### **How It Works:**&#x20;

**Isolated Margin Example**\
A trader with $20K USDC on Intent-based system opens a **BTC perpetual trade worth $50K at 10X leverage**. They allocate **$5K USDC as margin in an isolated sub-account**. If liquidated, only the $5K is lost, leaving the other **$15K protected**.

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_To isolate collateral on Intent-based system, separate sub-accounts must be used for each trade._
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**Cross-Margin Example**\
A trader with **$20K USDC** opens a **BTC perpetual ($50K) and an ETH perpetual ($30K)**. With cross-margin, the **entire $20K serves as collateral for both trades**. If BTC drops but ETH rises, profits from ETH can support the BTC position—**preventing liquidation**.



#### **Why Cross-Margin?**

&#x20;**Better Capital Efficiency** – Use your whole portfolio as collateral, reducing margin needs and allowing more trades with the same funds.

&#x20;**Lower Margin Requirements** – Less capital is required upfront, making trading more accessible.

**Automatic Risk Management** – Inent-based system auto-adjusts margin between positions, helping during market volatility.

**Portfolio Margining** – Gains from one position can offset risks in another, preventing unnecessary liquidations.

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#### **The Bottom Line**

Intent-based's **cross-margin system** boosts **efficiency, flexibility, and security** for traders. Lower margin requirements, automatic portfolio management, and real-time risk adjustments make it a powerful tool for optimizing your trading strategy.
