The Margin Engine

The margin account

A firm funds one margin account in USDC or USDT before it trades. The contract holds that balance and never lends or re-pledges it.

• One balance — every position the firm opens draws from the same margin account; no position opens unfunded.
• Non-custodial — the account lives in a public smart contract, and every record is immutable.
• Free collateral stays liquid — the firm withdraws any balance the open book does not require, and the contract verifies that requirement before it releases anything.

Initial margin

Each side locks initial margin per position when the position binds. The amount is a percentage of notional, set per side and sized to the pair: a more volatile or gap-prone currency carries a higher rate.

• Collateral, not credit — both sides trade against locked collateral, never against a promise to pay.
• Held in reserve — running profit and loss never touches initial margin; variation margin settles that separately.
• Returns at the end — the locked margin releases back to the margin account when the position closes.

Variation margin

Profit and loss settles continuously against the mark. Either side can mark a position at any time, and the result settles at once.

• Portfolio-first — the margin engine pays an obligation from gains on the firm's other positions before the margin account moves.
• Routes existing collateral — what those gains do not cover, the margin account pays; nothing new is called in.
• Gains land free — profit credits the margin account, available to withdraw or to back a new position.

unknown diagram: pitch-engines-margin-cycle

The cure window

A shortfall the portfolio and the margin account cannot cover opens a 48-hour cure window. Marking never pauses inside it, and gains on the firm's other positions keep counting toward the shortfall for the whole window.

• 48 hours to fund — the firm cures the shortfall any time before the window closes.
• The 60% maintenance floor — account value below 60% of initial margin ends the window early, even with time left.
• Handed off — a position that falls through the floor goes to the risk engine at once.