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Cross Margin
By default, every position in LEXER is under isolated-margin and the risk is not shared across different positions. This means that for any pair, you can open any number of long and short positions simultaneously.
LEXER supports cross-margin, as well as compounding since all positions in LEXER, are NFT-based. Once you opened a new position in LEXER, a new NFT will be minted to you containing all the metadata in your trade, such as the size, and the trading. All these metadata are fully saved on-chain to maximize the level of decentralization, and also to support compounding and cross-margin.
How it works
To enable cross-margin, users can open a cross-margin vault and deposit their positions into the vault. The value of the vault will be the total collateral balance plus the accumulated PnL of all the positions in the vault. Once the position is deposited into the vault, the total collateral balance and the accumulated PnL will be updated.
If the vault has lost 97% of its total collateral balance, the vault will be liquidated and all positions within the vault will be closed. Any remaining liquidity after liquidation will all be sent back to the owner of the vault.
Users can deposit and withdraw positions from the vault at any time except if the vault will be immediately liquidated, or failed to maintain the liquidation level once the withdrawing position is withdrawn.
Once the position is deposited into the vault, since the risk is shared across the whole vault, a position can potentially lose more than 100% of its collateral balance, which the traders should take caution against and trade at their own risk.
The leverage margin is calculated based on the collateral balance of the position itself, not the whole vault. Therefore, despite being deposited into the vault, a position cannot have leveraged more than the limited level using its collateral balance.
By allowing positions to be cross-margin, LEXER’s users can enjoy higher flexibility in a volatile market, and freedom to share risk within different pairs, such as cross-margin between Forex and Crypto.
Any open position in Lexer disregarding the margin type can compound or partially close position anytime without closing and reopening the position.
Traders can compound their position as long as there is available collateral within the chosen leverage, unrealised profit can also be seen as collateral to compound into a bigger position size.