2.3.3 Flexible Collateral Management

Biggest change: FLEX Coin can now be used as collateral to trade futures.

Most cryptocurrency derivatives exchanges have a single margining currency per trading market. So called “Inverse contracts” in BTC would have BTC as the margining currency, and “USDT contracts” would use USDT as the margining currency.

However many of these exchanges do not allow flexibility of using other cryptocurrencies as collateral. For example, what if you want to trade “USDT contracts” (we call USD margined contracts “Linear contracts”) and you have a lot of BTC, but you want your BTC holdings to count as collateral?

Here at CoinFLEX, we provide the flexibility to post different currencies as collateral. For each eligible coin, an LTV (Loan-to-Value) adjustment will be applied when calculating the collateral balance of an account. Please note any gains or losses in positions will still be settled in the margin currency.  LTV factor for each coin is listed here 3.11 Collateral”.

If your margin currency balance starts getting too low/negative, CoinFLEX will automatically trade your collateral coins into the margin currency (USD for Linear-USD accounts) by placing orders in the spot markets.

This will happen under the following situations

  • Your margin currency balance is lower than set (negative) thresholds:

Margin currency

Threshold

USD

[ – 10,000] USD

  • You are close to liquidation: RiskRatio < 100%

  • Your negative margin currency balance is larger than your Collateral Balance

In these cases, eligible collateral will be used to satisfy the above criteria, selling in the following order:

  • Linear-USD accounts:

    • BTC/USD

    • FLEX/USD

Liquidations will then take place in the spot markets on CoinFLEX.

Please note that collateral conversions may lead to you having more than zero USD/BTC left, as more is used than necessary in case of movement in price.

Contents