Understanding collateral

What is collateral?

Collateral determines how much you can borrow and it is a form of security to cover potential losses. Collateral can be liquidated (forcibly sold) to repay your debts. Collateral is liquidated to reduce your leverage when it becomes dangerously high.

How is your collateral calculated?

Collateral Value

A trading account’s collateral value is a single US dollar value that represents the current value of all collateral in the account. It is used in leverage calculations and liquidation scenarios.

Collateral Value is calculated as the product of all eligible assets held by a customer, multiplied by that asset’s collateral rating and the current index price of the asset. Liquid assets are those that are currently idle, or are locked in open limit orders (for limit orders we use the worst-case scenario of the order being filled or not being filled, to determine the applicable collateral rating and therefore the collateral value).

Collateral Value (in USD) = Assets x Collateral Rating x Index Price

For example, suppose your portfolio consisted of:

• 100 BTC idle (valued at US$20,000, with a collateral rating of 95%)
• 5,000 USDC idle (valued at US$1, with a collateral rating of 100%)
• A limit order to buy 10,000 XYZ using 100,000 USDC (where XYZ has a collateral rating of 0%)

Then your trading account’s collateral value would be:

= (100 BTC x US$20,000 x 95%) + (5,000 USDC x US$1 x 100%) + (100,000 USDC x US$1 x 0%)

= US$1.905 million

Collateral Rating

The Collateral Rating determines what percentage of the notional value of an asset counts towards your total collateral value. The rating is based on the liquidity profile of an asset.

*Please note that currently USD fiat is not eligible as collateral, but it will be available soon.

Viewing your collateral

To view your current collateral:

1. On the left hand navigation, choose Portfolio.
   
   

2. By default, Overview should already be pre-selected. You will see the available collateral in US dollars.