Margin & liquidations

Margin

Cross-Margin by Default

Vest uses cross-margining by default. This means your collateral is shared across all open positions. Gains from one trade can offset losses from another, providing greater capital efficiency.

Your portfolio value is calculated as:

Portfolio Value = Collateral + Total Realized PnL + Total Unrealized PnL

Leverage for your entire portfolio is:

Leverage = Total Notional Value / Portfolio Value

When you specify the size of a new trade, it automatically adjusts the leverage for your entire portfolio.

Margin Requirements

To open a new position, your portfolio value must meet the total initial margin requirement:

Total Initial Margin Requirement = Σ (Position Size × Index Price × Initial Margin Ratio)

If your portfolio value falls below this threshold, the trade won’t execute.

The maintenance margin requirement works similarly, but uses the maintenance margin ratio. If your portfolio value dips below this maintenance threshold due to unrealized losses, liquidations occur.

Liquidations

Vest offers partial liquidations, minimizing unnecessary loss for traders. Instead of liquidating your entire position when margin requirements aren’t met, Vest only liquidates enough to bring your account back to a healthy level. Because risk is fully priced in, this means that there are zero liquidation penalties.

How Liquidations Work

If your portfolio value drops below the maintenance margin requirement:

• Vest’s liquidator identifies the smallest portion of your position needed to reduce systemic risk.

• The liquidation is executed at the best possible price, minimizing costs for you and minimizes systemic risk across all markets.

• The process restores your portfolio to a healthy margin level without over-liquidation while preventing shocks to the market.

Technical details on liquidations can be found in the whitepaper.