Margin, leverage and liquidation

Each position on the DEX starts with a single choice: the margin you put behind it. That margin is what the position works with, and on Quanta it is also the most the position can ever lose. The rest of this page builds on that.

One position, one margin

Margin on the DEX is isolated. Open a position on PKMN, give it a margin, and that margin sits in its own compartment, apart from the rest of your trading account. It is held in USDC, the same currency you deposit (The DEX). Any loss on the position is settled from its own margin and from nowhere else. If the position is liquidated, its margin covers the close, up to the full amount, and that is the end of it. Your other positions and your free balance stay exactly as they were, and the funds in your wallet outside the trading account are never involved.

Cross margin, common on other venues, pools everything you hold, so one position can draw on the whole account. Quanta keeps every position isolated, so your maximum loss on a position is visible before you click. Fees are charged when a position opens and when it closes (Fees), and funding accrues to or from the margin while it stays open (Funding). Both stay inside the margin.

Leverage, and why the cap sits at 20x

Leverage is position size divided by margin. At 1x, your exposure equals your margin. At 20x, the same margin carries twenty times that exposure. The index moves at its own pace whichever multiplier you pick; what changes is how much your margin moves with it. A 2% move in the index is 2% on a 1x position and 40% on a 20x position, up or down.

The ceiling is 20x by design. A Quanta index is calmer than any single card because of how it is built: the median of real sales for each constituent, each one scaled so no card dominates, then lightly smoothed (Methodology principles). Very high leverage adds nothing to an underlying like that. What it does is pack liquidations into a narrow range right next to the current price, where each forced close becomes an order that pushes the price into the next one. A 20x ceiling keeps the nearest liquidations further from the price, and the mark price band keeps the book from pulling the mark toward them. Every trader on the market benefits, including the ones running modest leverage.

Initial margin, maintenance margin, liquidation

Two thresholds shape a position from open to close.

Term	In plain words
Initial margin	The margin needed to open a position of a given size at a given leverage. The higher the leverage, the smaller the initial margin.
Maintenance margin	The minimum a position has to keep while it is open. It sits below the initial margin, so the position has room to move before it is reached.
Liquidation price	The mark price at which your margin, after unrealized loss, reaches the maintenance level. It is shown on every open position.

You open with at least the initial margin. From that moment the position is valued continuously against the mark price: unrealized profit adds to the margin, unrealized loss draws it down. Nothing happens until the margin, after loss and funding, reaches the maintenance level. At that point the position is liquidated, meaning it is closed for you, and the margin covers the loss plus any liquidation charge in the fee schedule. The requirements at each leverage level and the mechanics of the close are part of each market's published parameters.

Liquidation is against the mark price

A liquidation is decided by the mark price and never by the last traded price, and that choice works in your favor. The last price is simply whatever the latest trade printed, and one careless market order on a thin book can print well away from where the market really is. If liquidations followed that number, one stray trade could close every position in its path, and a large enough trader could place that trade on purpose.

The mark price is built to resist that. The matching engine derives it from the index and the orderbook, then clamps it inside a narrow band around the index, so the mark can only go as far as the index allows (Index price, mark price, last price). An outlier print stays an outlier print. Pushing the mark beyond the band would mean moving the index itself, and the index is built from real on-chain sales of graded cards that pass through the manipulation guards first.

The insurance fund and auto-deleveraging

When a liquidation closes at a price beyond what the position's margin covers, the difference has to come from somewhere. On a perpetual market the only other party is the winning side, and the insurance fund is there so that the winning side is not the one paying. Every Quanta market has its own insurance fund, funded by Quanta before the market opens, and any liquidation shortfall is drawn from it. The fund's balance against its requirement is one of the three health conditions each market checks around the clock, and the market moves to reduce-only if the balance drops below it (Market safeguards). The requirement is part of the market's published parameters.

Auto-deleveraging stands behind the insurance fund. If a shortfall ever exceeds the fund, the engine trims part of the opposing positions, the ones gaining from the move, until the gap is closed. It is scoped to a single market, so an event on PKMN never reaches a position on any other market.

Sizing a position

Pick the margin first, as the amount you want behind this view, then let size and leverage follow from it. The same exposure at lower leverage uses more margin and sets the liquidation price further from the current mark. Funding accrues against the margin while you hold, so the funding rate is worth reading before you open and while the position runs.

Perpetuals, explained for collectors walks through size and margin with worked numbers.

Sources for this page are listed in Sources.