> For the complete documentation index, see [llms.txt](https://docs.v2.pod.network/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.v2.pod.network/documentation/markets/margin.md).

# Margin

Pod uses cross margin. There is a single collateral asset, USD, shared between perpetual and spot markets, so there is no need to transfer between the two.

## Account state

Each account is summarized by a handful of quantities.

Start with **cash** - the part of the account not tied to any position's PnL. It accumulates deposits and incoming funding, and decreases on withdrawals and outgoing funding:

```
cash = deposits − withdrawals + funding_payments
```

(See [Per-position payment](/documentation/markets/perpetuals.md#per-position-payment) for how funding settles.)

**Equity** is the account's mark-to-market value: cash plus the PnL on every open position, where each position's PnL is `(mark_price − entry_price) × position.size`:

```
equity = cash + sum pnl over open positions
```

A position's **notional** is its mark-to-market size, and the account's **effective leverage** is total notional divided by equity:

```
notional           = sum over open positions: |position.size| × mark_price
effective_leverage = notional / equity
```

## Margin requirements

Every open position contributes to two margin levels for the account: **initial margin**, required to open or increase a position, and **maintenance margin**, required to keep it open. Each contributes a fraction of its notional:

```
locked_margin      = sum over open positions: |position.size| × mark_price × initial_margin_ratio
liquidation_margin = sum over open positions: |position.size| × mark_price × maintenance_margin_ratio
```

`initial_margin_ratio` and `maintenance_margin_ratio` are per-market parameters, with the maintenance ratio strictly smaller.

The headroom between equity and `locked_margin` is the **available margin** - new positions can be opened, or existing ones increased, only while it is non-negative:

```
available_margin = equity − locked_margin
```

The maximum cash that can be withdrawn at any time is capped both by available margin and by realized cash, since unrealized PnL is not withdrawable until the position closes:

```
withdrawable_cash = min(available_margin, cash)
```

When `equity < liquidation_margin`, positions become eligible for liquidation.

## Liquidation

* Liquidations are submitted as market orders into the order book. They contribute to liquidity and are matched like normal orders.
* If the account's equity falls below 2/3rd of `liquidation_margin`, the entire portfolio is transferred to the backstop vault.
* If equity goes negative, auto-deleveraging (ADL) is triggered.

## Auto-Deleveraging (ADL)

When an account's equity is negative, ADL closes positions on the profitable side of the market to cancel out the negative equity:

* Positions on the opposite side are sorted by leverage (highest first).
* These positions are closed at the last batch price until all negative equity is offset.
* The underwater position itself is also closed.


---

# Agent Instructions
This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com.

## Querying This Documentation
If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question.

Perform an HTTP GET request on the current page URL with the `ask` query parameter:

```
GET https://docs.v2.pod.network/documentation/markets/margin.md?ask=<question>
```

The question should be specific, self-contained, and written in natural language.
The response will contain a direct answer to the question and relevant excerpts and sources from the documentation.

Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.