Spot margin
Preview. The borrow → leveraged-buy → close loop and automatic forced liquidation are live, but a pair enables only once governance calibrates its per-pair risk parameters, and no pair is calibrated yet. Do not assume production safety at scale.
TL;DR
Spot margin lets you borrow quote (USDC) to buy spot with leverage, instead of paying 100% upfront. The borrowed USDC comes from the Earn pool, you pay interest on it, and the position carries a maintenance margin and a liquidation price like a perp.
Spot margin is cross-margined against your one unified USDC account — the same collateral that backs your perpetual positions. There is no separate deposit: an open holds its margin requirement against your account-wide free collateral, and liquidation is decided at the account level. A spot-margin loss and a perpetual loss draw on the same collateral.
How it works
1. Open: borrow quote from the Earn pool; the borrow funds the buy 100%.
The margin requirement is HELD against your unified USDC account
(no separate deposit).
2. IOC-buy the base asset on the spot book with the borrowed quote.
The bought base is held SEGREGATED on the margin account.
3. Pay borrow interest continuously while the loan is open.
4. Close: sell the base, repay borrow + accrued interest, keep the remainder.
Leverage is notional / free collateral. The bought base is held in a
segregated holding on the margin account, never commingled with your spendable
spot balances, so a close (or a later liquidation) touches exactly that base. The
first release allows one open position per (account, pair) (no add-on); the
open IOC instantly repays any unspent borrow, so the outstanding loan equals
only what the buy actually spent.
Action surface
Two /exchange actions (both
sender-authorized) drive the loop. Confirm committed state via
/info spot_margin_state.
| Action | Effect |
|---|---|
spot_margin_open | Borrow + IOC-buy base on leverage; gated by the account-wide initial-margin requirement |
spot_margin_close | IOC-sell the held base, repay principal + interest, return the remainder to your account |
Margin
The position's requirement joins your account-wide margin, the same figures a perpetual position uses:
position_value = base_held × mark_px
debt = borrowed + accrued_interest
position_pnl = position_value − debt
init_required = position_value × spot_margin_initial_bps / 10000
maint_required = position_value × spot_margin_maintenance_bps / 10000
init_required is subtracted from your account free collateral while the
position is open; position_pnl and maint_required enter the account-level
health decision alongside your perpetual legs. An open is rejected if your free
collateral cannot cover init_required. Read free collateral from the account
read as withdrawable, which is the same
budget clamped at zero; the gate itself keeps the raw signed value. The
position is liquidated when the
account falls through its maintenance floor — see Liquidation
and margin modes.
The spot maintenance ratio is a per-pair parameter, set conservatively — and
generally higher than a comparably-liquid perp. The reason is mechanical: a
spot-margin liquidation sells the base into the spot book, so the maintenance
buffer has to cover the realized slippage of unwinding the position at the
threshold, or the lending pool absorbs the shortfall. Thinner (long-tail) books
eat more slippage and so carry a higher ratio. The exact value per pair is
calibrated from that pair's book depth and volatility against a target
liquidation-slippage bound — it is a governance-set risk parameter, not a fixed
constant, and a pair does not enable spot margin until its ratio is calibrated.
On testnet these per-pair ratios are still being calibrated — a pair without
calibrated risk parameters rejects every spot-margin action for it
(spot margin not enabled for pair).
Interest
Borrowed USDC accrues interest at a per-pair rate (spot_borrow_rate_bps,
annualised, accrued every block). Interest flows to the Earn
pool, lifting its per-share value — that is the lenders' yield. In the first
release the rate is fixed; a utilisation-based curve is a later upgrade.
The rate is 0 today, so nothing accrues. The accrual step stamps the time
and leaves the index where it was. A governance vote sets a non-zero rate, and
another calibrates a pair so a borrow is possible at all. Until both land there
is no interest to pay and no yield to earn — see Earn.
Liquidation
Every block the chain prices your whole account — perpetual legs and any spot-margin position — against the one unified USDC account, and forced-closes when the account falls through its maintenance floor. A spot-margin position is liquidated only when its account is underwater, not on a per-pair test.
The forced close runs through the same settled path as a voluntary close — the held base is IOC-sold on the spot book, the Earn pool is repaid principal + interest, the remainder (minus a small liquidation fee, which capitalizes the protocol's insurance fund) is returned to your account. Two anti-cascade properties mirror the perp forced close:
- Price floor. The forced sell is a LIMIT bounded at
mark × (1 − floor)(default: half the maintenance ratio, per-pair configurable). A thin book is never swept — whatever cannot sell above the floor stays held and re-evaluates next block. - Partial fills keep the position open. Realized proceeds repay debt immediately; the unsold base is retried as liquidity returns.
Because collateral is shared, a spot-margin blow-up can reach your perpetual account — the account collateral covers the shortfall first. This is the risk-isolation trade-off of cross margin.
Shortfall handling. When a full unwind cannot cover the debt, your account collateral covers the shortfall first; only a residual the account cannot cover leaves the pool's borrowed book and is socialized to the Earn suppliers — the pool's supplied total is reduced (floored at zero), which lowers share value. The conservative per-pair maintenance ratio and the automatic liquidator exist to make that shortfall rare.
Fees
A spot-margin position carries three distinct charges:
| Charge | When | Rate |
|---|---|---|
| Trading fee | on the open and close IOC fills | the pair's spot maker/taker rate (spot margin trades the spot book) |
| Borrow interest | continuously, on the outstanding USDC borrow | spot_borrow_rate_bps — per-pair, annualised, accrued every block; flows to the Earn pool as lender yield |
| Liquidation fee | only on a forced close | a small per-pair fee that capitalizes the protocol's insurance fund |
The open and close are ordinary spot IOC fills, so they pay the spot fee
schedule, not the perp tiers. The borrow interest is the spot-margin-specific cost
— it is exactly the yield Earn suppliers receive. All rates
are per-pair governance parameters; query them via
/info spot_margin_state and the spot
fee_schedule.
Collateral scope
Spot margin is cross-collateralized against your one unified USDC account — the same pool that backs your perpetual positions. There is no per-pair collateral bucket.
| Collateral | Liquidation blast radius | |
|---|---|---|
| Spot margin | Your unified USDC account (shared with perps) | Account-wide |
Cross collateral maximises capital efficiency — one balance backs everything — at the cost of risk isolation: a leveraged spot blow-up draws on the same collateral as your perpetual positions, and a perpetual loss reduces the collateral that backs a spot-margin position. Size positions with the whole account in mind. See margin modes.
Relationship to Earn
Spot-margin borrowers are the demand side; Earn depositors are the supply side. Borrow interest paid by spot-margin traders is exactly the yield Earn depositors receive. See Earn for the yield calculation.
See also
- Earn — the lending pool that funds spot-margin borrows, and how yield is computed
- Margin modes — the cross-collateral model shared with perps
- Tiered liquidation — the liquidation ladder + insurance waterfall
FAQ
Show FAQ
Q: Is plain (unleveraged) spot affected? A: No. Buying spot with 100% of your own balance works exactly as before — spot margin is an opt-in overlay.
Q: Can my spot-margin loss touch my perp account? A: Yes. Spot margin is cross-collateralized against your one unified USDC account — the same collateral your perpetual positions use. A spot-margin loss draws on that shared collateral, and a perpetual loss reduces the collateral backing a spot-margin position. There is no per-pair risk isolation.
Q: Do I post collateral first? A: No. There is no separate deposit. An open holds its initial-margin requirement against your account-wide free collateral, exactly like a perpetual open.
Q: Where does the borrowed USDC come from? A: The Earn lending pool. Borrows are capped at the pool's available (un-lent) liquidity.
Q: What rate do I pay? A: A fixed per-pair annualised rate in the first release, accrued every block. Utilisation-based pricing comes later.