> For the complete documentation index, see [llms.txt](https://candora.gitbook.io/whitepaper/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://candora.gitbook.io/whitepaper/candora-exchange/cross-margin.md). # Cross Margin Cross Margin Cross Margin allows participants to use a shared collateral pool across supported positions rather than allocating margin separately to each market. Instead of isolating collateral between individual positions, the exchange evaluates account risk holistically, allowing available collateral to support exposures across multiple instruments and trading strategies. This approach improves capital efficiency by reducing unnecessary collateral fragmentation while maintaining a unified view of account solvency. ### Unified collateral framework Under the cross-margin model, eligible account assets contribute to a common collateral pool that may be used to support multiple positions simultaneously. [Risk Engine](/whitepaper/candora-grid/risk-engine.md) continuously evaluates the aggregate risk profile of the account rather than treating each position as an independent risk silo. As positions change, collateral availability updates dynamically across the portfolio, allowing unrealized profits, losses, and collateral movements to be reflected throughout the account in real time. This creates a more efficient capital structure while preserving a consistent solvency framework across all supported markets. ### Real-time portfolio risk assessment Rather than evaluating margin requirements on a position-by-position basis, Risk Engine computes solvency using the account's complete exposure profile. Risk evaluation incorporates: * position exposure * collateral composition * asset volatility * liquidity conditions * correlation behavior * concentration risk * platform stress conditions By evaluating the portfolio as a whole, the system can recognize risk offsets where appropriate while still accounting for potential concentration and contagion risks. ### Dynamic collateral valuation Not all collateral contributes equally to available margin capacity. Risk Engine continuously evaluates collateral quality using valuation data from [Oracle](/whitepaper/candora-grid/oracle.md) alongside market-state information provided by [Pulse](/whitepaper/candora-grid/pulse.md). Assets may be assigned risk-adjusted collateral values based on factors such as liquidity, volatility, market depth, and observed market conditions. As market conditions change, effective collateral value may increase or decrease according to predefined risk policies. This allows margin capacity to remain aligned with current market conditions rather than relying on static assumptions. ### Stress-aware margin controls Cross-margin calculations incorporate Candora's shared stress-state framework to ensure that leverage capacity remains responsive to changing market conditions. As systemic stress increases, Risk Engine may: * increase margin requirements * reduce effective collateral value * tighten leverage capacity * increase solvency buffers These adjustments are applied through deterministic risk policies designed to reduce the probability of forced liquidation during unstable market conditions. By incorporating stress awareness directly into portfolio evaluation, the system can proactively reduce aggregate risk before localized market disruptions develop into broader solvency concerns. ### Continuous solvency monitoring Account solvency is evaluated continuously rather than through periodic recalculation cycles. Updates originating from: * [Orbit](/whitepaper/candora-grid/orbit.md) execution activity * [Pulse](/whitepaper/candora-grid/pulse.md) market-state changes * [Oracle](/whitepaper/candora-grid/oracle.md) valuation updates * [Vault](/whitepaper/candora-grid/vault.md) collateral movements are incorporated into the account's risk profile as they occur. This allows available margin, collateral utilization, and liquidation thresholds to remain synchronized with current market conditions at all times. ### Liquidation coordination When an account no longer satisfies applicable solvency requirements, Risk Engine determines the required reduction in risk exposure while [Orbit](/whitepaper/candora-grid/orbit.md) remains responsible for execution. Because cross margin evaluates the account as a unified portfolio, liquidation decisions are based on overall account solvency rather than isolated position performance alone. The objective is to restore solvency while minimizing unnecessary position disruption and preserving orderly market behavior. ### Capital efficiency The primary purpose of cross margin is to improve capital utilization without compromising risk management. By allowing eligible collateral to support multiple positions simultaneously, participants can reduce idle collateral, maintain a consolidated risk profile, and deploy capital more efficiently across supported markets. At the same time, continuous risk monitoring, dynamic collateral valuation, and stress-aware margin controls ensure that increased capital efficiency remains bounded by the platform's solvency framework.