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Decibel uses cross-margin by default, meaning all your collateral backs all your positions. This page explains how margin, equity, and leverage work together.

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Key Concepts

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Account Equity

Your account equity is your total value: 
Account Equity = Total Collateral + Unrealized PnL
Unrealized PnL includes both mark-to-market gains/losses and accrued funding. This is the number that determines if you can open new positions or face liquidation.

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Initial Margin (IM)

Initial margin is the collateral required to open a position. It’s based on the leverage you select: 
IM Fraction = 1 / User-Selected Leverage
For example, if you select 10x leverage, your IM Fraction is 10%. To open a 10,000position,youneed10,000 position, you need 1,000 in initial margin.

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Maintenance Margin (MM)

Maintenance margin is the minimum collateral to keep a position open: 
MM Fraction = 1 / (Max Market Leverage × 2)
If the market’s max leverage is 40x, the MM Fraction is 1.25%. Your position gets liquidated if your equity falls below your total MM requirement.

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Cross-Margin Behavior

With cross-margin, all your collateral is shared across all positions:
  • Profits from one position cover losses in another
  • Liquidation only happens when total equity falls below total MM requirement
  • Capital is more efficient since you don’t isolate margin per-position

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Example

You have $10,000 USDC deposited and two positions:
  • Long BTC-PERP: 50,000notional,currently+50,000 notional, currently +2,000 PnL
  • Long ETH-PERP: 30,000notional,currently−30,000 notional, currently -1,500 PnL
Your account equity is 10,000+10,000 + 2,000 - 1,500=1,500 = 10,500. The ETH loss doesn’t trigger liquidation because the BTC profit offsets it.

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Isolated Margin

Isolated margin allocates collateral to individual positions, limiting your risk to that specific position. If an isolated position gets liquidated, your other positions and remaining collateral are unaffected.
Isolated margin mode is currently under discussion. Check back for updates on availability.

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Tradeable and Withdrawable Balance

Decibel distinguishes between what you can trade with and what you can withdraw. A PnL haircut (set per market) prevents over-withdrawal on volatile unrealized gains.

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Tradeable Balance

Your tradeable balance determines how much you can use to open new positions: 
Tradeable Balance = Account Equity - max(IM Requirement, PnL Haircut Requirement)
The max() picks whichever is larger: your initial margin requirement or the PnL haircut. More volatile markets have higher haircut requirements, so large unrealized gains on volatile positions reduce your tradeable balance more than stable ones.

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Withdrawable Balance

Your withdrawable balance is more conservative. It’s based on collateral value only, excluding unrealized gains: 
Withdrawable Balance = Account Collateral Value - IM Requirement - Unrealized Loss
This means unrealized profits don’t increase your withdrawable amount. You can only withdraw collateral that isn’t backing open positions or covering unrealized losses.

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Leverage Selection

When opening a position, you select your leverage by choosing how much initial margin to allocate. Higher leverage means:
  • Smaller initial margin requirement
  • Larger position relative to collateral
  • Closer to liquidation price
  • Greater profit/loss per price move
LeverageIM FractionPosition Size per $1,000
5x20%$5,000
10x10%$10,000
20x5%$20,000
40x2.5%$40,000

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Key Formulas

Account Equity = Total Collateral + Unrealized PnL

Unrealized PnL = Mark-to-Market PnL + Unrealized Funding Cost

Mark-to-Market PnL = (Current Mark Price - Entry Mark Price) × Position Size

IM Requirement = Σ(Position Notional × IM Fraction)

MM Requirement = Σ(Position Notional × MM Fraction)

Tradeable Balance = Account Equity - max(IM Requirement, PnL Haircut Requirement)

Withdrawable Balance = Account Collateral Value - IM Requirement - Unrealized Loss

Liquidations

What happens when equity falls below maintenance margin

Funding Rates

How funding affects your unrealized PnL