Margin, defaults, and payout

Custody

The taker's margin sits in a segregated isolated account, one per maker: the SCA. It opens the first time the taker holds a position with that maker, and it holds the initial margin only. CRX does not lend it, reuse it, or net it against another counterparty. It moves only on on-chain proof.

The initial margin sizes a worst-case move, about ten days of cover for the counterparty. It is quoted at trade time.

Variation margin

Variation margin (VM) manages the position while it is open. Either side triggers it at any time, most often the counterparty. A VM event clears the profit and loss between the price at the last VM and the current Pyth EMA, across every position the taker holds with that maker.

• Up: the margin lands in the taker's general balance, its free wallet inside CRX.
• Down: the taker pays it from the general balance.

There is no phone call. VM moves collateral already posted.

Default check

If the general balance cannot cover a VM call, a default check runs. Every one of the taker's SCAs goes through a VM event at one fresh price, collecting all profit and loss at that moment. If the general balance is still below zero after the sweep, the taker loses access to the account and enters the default procedure. If the taker was solvent, the accuser forfeits its bond to the taker.

Counterparty default

A failed counterparty never costs the taker its collateral. CRX keeps the position alive and auctions the failed side to another maker. If no maker takes it, the taker is paid in order: the defaulter's maintenance margin, the extra margin collected during the default procedure, the CRX guarantee fund, then ISDA counterparty recovery.

The guarantee fund is CRX's own money, not a member pool. In the MVP it holds a $1 seed.

Settlement

Margin clears daily through VM. At expiry, the Pyth EMA is read once. The taker receives the difference between the last VM mark and that price, settled in cash on the notional. The remaining initial margin in the SCA then returns to the general balance. Payment is atomic.