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2.3.3 Flexible Collateral Management

July 24, 2020

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 the 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 a users margin currency balance (USD) becomes negative due to the real-time realization of negative P&L, the exchange will automatically borrow USD within the users account to cover this USD shortfall. This USD borrow order will be executed by selling the accounts underlying collateral coin on CoinFLEX’s Repo order book. For example, if a user has deposited BTC as collateral, the USD borrow in this case, would be performed as a sell trade on CoinFLEX’s BTC Repo order book. Thus, an auto USD borrow order will be executed if a users account shows a USD shortfall of at least $1000.


More information about CoinFLEX’s Repo markets can be found here “2.3.6 Repo”