Mdex perpetuals: margin modes at the 2022 launch

Which USDT balance backed cross-margin positions?

All available USDT in the cross-margin account backed positions with the same settlement cryptocurrency under the launch terms. Several positions could therefore draw on one balance. Losses on one position could reduce the support available to the others, even when those positions involved different trading pairs. The relevant boundary was the cross-margin account and its settlement asset. It wasn’t the total value of every token that a connected wallet might display.

Sharing collateral could give a position access to funds beyond its initial allocation. Those additional funds also became exposed to losses within that shared arrangement. Cross margin didn’t promise that available collateral would remain sufficient as market prices moved.

Isolation applied to each trading pair

Each trading pair had an independent isolated margin account, so its margin calculation stayed within that account. Liquidation there didn’t affect the other isolated margins described at launch. The amount allocated to the affected account still faced trading losses. In the accompanying hedge-mode rules, long and short positions in the same contract could have different liquidation prices because each position’s margin allocation mattered.

View full-size image

Can cross-margin and isolated-margin positions coexist?

The USDT-margined service that Mdex launched in October 2022 supported cross-margin and isolated-margin positions at the same time. Supporting both modes didn’t override the restrictions on changing an individual contract’s mode.

Changing a mode applied to the selected contract

The documented margin selector applied only to the selected contract, and open positions or orders blocked a mode change. The interface used cross margin by default. Coexistence meant different contracts could use different arrangements. It didn’t mean the interface would convert an active position, or that selecting isolated margin for one contract would change settings everywhere else.

An unfilled order also mattered under that restriction. A contract could have no filled position and still have an open order that prevented switching in the documented interface.

Leverage and position size governed different margin requirements

The initial margin ratio depended on the leverage multiplier, while the position’s notional value determined its available leverage tier. Notional value was the contract exposure that the system used for sizing. Larger positions had lower maximum leverage under the documented tiered model. The futures calculator expressed initial margin as quantity multiplied by entry price and the initial margin ratio. It defined that ratio as one divided by the leverage multiplier. The maximum position amount for a tier included combined long and short positions. Holding both directions therefore didn’t remove either side’s exposure from the tier’s position-size limit.

Maintenance margin followed the position-size tiers rather than the selected leverage multiplier. Lowering a leverage setting wasn’t equivalent to lowering the maintenance margin ratio. The documented controls also didn’t allow lowering leverage on isolated positions; changing margin mode and adjusting leverage were separate controls.

Which price triggered liquidation?

The mark price triggered liquidation when it reached the liquidation price under the documented futures rules. The system used the mark price to calculate unrealized profit and loss. This reference price combined market-index and funding information, so the latest contract trade wasn’t the only relevant price. Realized profit and loss depended on the price of the closing trade. The liquidation condition compared initial margin plus realized and unrealized profit and loss against maintenance margin. Once that margin fell below the required maintenance amount, the system triggered forced liquidation. The applicable margin balance followed the selected cross or isolated arrangement.

Funding could alter margin while a contract remained open

Funding payments depended on an open position when funding was assessed and on the applicable rate’s sign. The documented assessment could deviate by 15 seconds from the scheduled time. A positive rate meant long positions paid short positions. A negative rate reversed the payment direction. The documented calculation multiplied position notional value by the funding rate. Its base was contract exposure, which could exceed the posted margin. A funding percentage therefore couldn’t be read as a percentage of the margin deposit without accounting for that notional base.

Trading fees were separate from those periodic transfers. Paying funding could reduce the supporting balance, while receiving it could add funds.

The October 2022 launch and present availability

07:00 UTC on October 10, 2022 was the announced launch time for the USDT-margined perpetual feature developed through the ApolloX Finance partnership.

Liquidity mining rewarded eligible liquidity provider positions. The USDT-margined derivatives integration used margin to back contract exposure, giving its balances a different role from staking rewards.

Current access to this perpetual interface isn’t confirmed. If a later implementation changes its collateral accounts, switching restrictions or margin tiers, its behavior must be assessed under that implementation’s terms.