> 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/margin-and-perpetuals-trading.md).

# Margin & Perpetuals Trading

Leveraged Trading

Leveraged trading enables participants to obtain market exposure exceeding their deposited collateral by utilizing the margin and solvency infrastructure provided by [Candora Grid](/whitepaper/candora-grid.md).

Unlike spot trading, leveraged positions introduce exposure that must remain continuously supported by sufficient collateral.

As a result, trading activity is coordinated across [Orbit](/whitepaper/candora-grid/orbit.md), [Risk Engine](/whitepaper/candora-grid/risk-engine.md), [Oracle](/whitepaper/candora-grid/oracle.md), [Pulse](/whitepaper/candora-grid/pulse.md), [Vault](/whitepaper/candora-grid/vault.md), and [Connect](/whitepaper/candora-grid/connect.md) to ensure that execution, valuation, solvency, and settlement remain synchronized throughout the position lifecycle.

The leveraged trading environment is built on Candora's real-time risk architecture, allowing solvency conditions to evolve continuously alongside market activity rather than through periodic account recalculation.

### Continuous solvency monitoring

[Risk Engine](/whitepaper/candora-grid/risk-engine.md) continuously evaluates account solvency using synchronized inputs from across the Grid.

Position exposure, collateral balances, valuation updates, execution activity, and market-state changes are incorporated into a continuously updated risk model that reflects current account conditions.

Risk-state computation remains synchronized with:

* Orbit execution activity
* Pulse market-state updates
* Oracle valuation data
* Vault collateral balances

This architecture allows leverage availability, margin utilization, and liquidation risk to evolve alongside changing market conditions while preserving deterministic behavior and replay consistency.

### Dynamic margin framework

Margin requirements are governed by the risk policies defined within Risk Engine.

Initial margin, maintenance margin, and stress-adjusted solvency requirements may adapt to changing market conditions, including volatility, liquidity conditions, correlation behavior, and the platform's shared stress-state framework.

As market conditions become more unstable, margin requirements may increase and effective leverage capacity may decrease according to predefined risk controls.

This adaptive framework is intended to reduce systemic leverage accumulation during deteriorating market conditions while maintaining consistent risk treatment across participants operating within the same market regime.

Margin requirements remain visible to participants and continue to be enforced through deterministic risk controls rather than discretionary intervention.

### Liquidation and risk reduction

When an account no longer satisfies applicable solvency requirements, Risk Engine determines the exposure reduction required to restore acceptable risk conditions.

Risk Engine defines the required reduction, while Orbit remains responsible for executing any resulting orders according to its execution rules.

Where supported by platform risk policies, exposure reduction may occur through mechanisms such as:

* partial deleveraging
* incremental position reduction
* liquidity-aware execution
* controlled liquidation pacing

The objective is to reduce insolvency risk while minimizing unnecessary market disruption and preserving orderly execution conditions.

Liquidation processes remain subject to the same execution rules and market protections that govern other activity within the exchange environment.

### Integration with Candora Grid

Leveraged trading relies on coordinated operation across multiple infrastructure layers.

* Orbit manages order execution and position entry.
* Risk Engine manages solvency evaluation and margin enforcement.
* Oracle provides valuation inputs used in risk calculations.
* Pulse distributes market-state information and trading telemetry.
* Vault maintains collateral balances and settlement records.
* Connect provides participant access and account authorization.

This coordinated architecture allows leveraged trading to operate as an integrated component of Candora Grid while preserving clear separation between execution authority, valuation authority, solvency authority, and settlement authority.