Ethereal margin: cross-margin risk before closure

Ethereal margin pooled USDe collateral across perpetual positions within each subaccount, linking liquidation risk to shared equity while limiting the funds available for new orders and withdrawals. Its markets have closed, so users need to withdraw any remaining exchange funds. The former trading rules explain how position losses, reserved collateral, and funding affected an account. They also explain why total equity and the amount available to withdraw could differ.

Market closure changed the decision for remaining balances

Remaining exchange funds need the withdrawal route now that Ethereal’s markets have closed. The app also directs users to transition to Meridian. The selected subaccount’s available balance identifies the collateral that can support a withdrawal request. A past leverage setting describes the former trading configuration, while the recoverable amount comes from the remaining account state. Controls for opening new positions belonged to the exchange’s earlier trading phase.

A withdrawal amount must fit within available margin. Destination support and withdrawal enablement also matter, because these settings govern whether the requested transfer can proceed. Cross-chain processing time varies with the destination. Once a withdrawal request is processed and its amount deducted, that pending transfer is separate from the balance still in the subaccount.

Subaccount equity determined the shared risk boundary

Positions within a cross-margin subaccount drew on the same collateral pool. A loss on one position reduced the equity that supported the others. The liquidation test compared that shared equity with the combined maintenance requirement across open positions, making the account’s aggregate exposure relevant to every individual trade.

Each market contributed its own required margin. A position’s size and mark price determined its notional value, while the market’s maintenance fraction determined its contribution to the threshold. The combined requirement therefore reflected the positions that actually remained open.

A profitable position could still enter liquidation with the rest of its subaccount. Its own gain didn’t give it a separate protected collateral allocation.

A subaccount had its own positions and balance. Funds elsewhere under the same wallet didn’t automatically enlarge that account’s shared margin pool.

Position size changed both margin requirements

Initial and maintenance margin answered different questions: whether collateral was sufficient to open exposure, and whether equity remained sufficient to keep the resulting positions open. Both depended on market configuration. A leverage maximum was a parameter for a particular market, not one permanent limit covering every Ethereal contract.

The initial requirement

Exposure at the mark price

Position notional was absolute position size multiplied by mark price. The fraction applied to that exposure, so larger positions required more collateral under unchanged settings.

The applicable leverage limit

At a market maximum leverage of L, the documented minimum initial margin fraction was 1/L. This described the minimum collateral requirement at that limit. It didn’t mean that every funded subaccount operated at maximum leverage.

The maintenance requirement

The documented maintenance fraction was 1/(2 × L), with L representing the market’s maximum leverage. Multiplying that fraction by position notional gave the position’s maintenance requirement. Across multiple positions, the account test used the combined requirement. Historical calculations need the settings that applied to the relevant market and event.

Mainnet alpha determined which profits were usable

Mainnet alpha excluded unrealized gains from the margin available for new trades and withdrawals. Unrealized losses reduced available margin. This configuration made an open gain and a spendable balance materially different account states.

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The restriction concerned available and withdrawable margin. Liquidation still depended on account equity relative to maintenance requirements, so an available-margin figure wasn’t a substitute for the equity test.

Closing profitable exposure could realize a gain and make it available as collateral. The actual execution price and applicable charges affected the realized amount. A mark-price profit shown before the fill wasn’t an exact withdrawal quote, particularly when the execution price differed from the mark.

Closing losing exposure released its position requirement while settling its loss. The released requirement and realized loss both affected the remaining available margin. A smaller margin requirement therefore didn’t promise a larger amount left to withdraw.

Unfilled orders changed available collateral

A resting order could reserve collateral before it filled. Ethereal’s available-margin calculation accounted for position requirements, order reserves, and unrealized losses alongside the total balance. Canceling an open limit order released the reserve for its unfilled portion. Cancellation didn’t reverse completed fills. Those fills could have increased, reduced, or closed a position, so a canceled order could still leave open exposure.

Funding and execution determined the net balance

Funding settlements changed collateral even when position size stayed constant. In the former perpetual configuration, funding was calculated and applied hourly. Positive funding transferred value from longs to shorts; negative funding reversed that direction. A funding debit could reduce equity enough to cross the maintenance threshold.

Trade execution introduced another distinction between expected and settled amounts. Position history recorded fill prices, sizes, and fees, while funding records explained payments associated with holding exposure. Those records served different accounting purposes. Releasing a position’s margin requirement didn’t refund earlier trading fees or funding debits. The net balance reflected realized trading results and the charges that actually applied, so the collateral originally committed to a position wasn’t necessarily the amount left afterward.

Oracle updates changed liquidation exposure

Ethereal used Pyth Lazer oracle prices to assess margin liquidation risk. The mark price fed the risk calculation, while order-book prices governed trade execution. A last-traded price on a chart and the oracle mark could therefore describe different conditions. This distinction mattered when comparing an account’s displayed liquidation exposure with the price at which a reducing order might fill.

The same oracle reference also contributed to funding calculations. Its role in measuring market prices didn’t turn it into an execution guarantee. Closing exposure depended on the order’s conditions and available liquidity, while liquidation depended on the account’s margin condition. A favorable last trade didn’t establish that shared equity remained above maintenance.

The maintenance breach triggered a complete takeover

Equity below the combined maintenance requirement triggered takeover of the entire affected subaccount. It canceled open orders, transferred every position to the liquidator at the bankruptcy price, and set the trader’s margin balance to zero. It then recorded the action onchain. The liquidator unwound the transferred exposure afterward; any surplus stayed in the insurance fund, which absorbed deficits. This wasn’t a partial liquidation limited to whichever position had suffered the largest loss.

Onchain settlement checked oracle-price freshness, position consistency, and equity below maintenance. A failed check reverted the liquidation transaction. These checks concerned whether the takeover could settle correctly. The insurance fund handled losses from the transferred positions; it didn’t promise to restore the liquidated trader’s collateral.

Earlier margin actions required different account states

The trading phase offered several ways to change collateral use or exposure. Each required a different starting state. Deposits, cancellations, and position exits below describe that earlier configuration; the closure notice directs remaining users toward withdrawals. The withdrawal variants also remain conditional on the route and token settings that actually support the transfer.

Canceling an order acted on its remaining instructions. Reducing or closing a position acted on executed exposure. A withdrawal acted on funds leaving the subaccount. These distinctions explain why the same balance could require a different action depending on whether collateral was reserved, supporting a position, or already committed to withdrawal.

Separate subaccounts differed from isolated position margin

A separate subaccount isolated its margin pool from other subaccounts. Isolated position margin would instead assign collateral to an individual position within an account. Ethereal’s documented trading app used cross margin by default, and that app description stated that isolated margin wasn’t yet available. The protocol’s design for both modes didn’t establish that the interface offered both choices.

Funding another subaccount therefore changed the boundary between account pools without changing cross margin into per-position isolation. Multiple positions inside that new subaccount still shared its collateral. Their combined maintenance requirement remained the relevant risk test, and a liquidation affected that subaccount’s full position set. A BTCUSD position remained derivative exposure supported by its subaccount’s USDe margin.

2026/10/11 updated