Margin

Katana Perps exclusively offers cross-margined perpetual futures contracts with leverage. Understanding how margin works is essential for managing risk and maximizing capital efficiency.

Collateral

Katana Perps uses USDC as its sole collateral asset. All deposits, withdrawals, and margin calculations are denominated in USDC. As a cross-margined exchange, all open positions contribute to a single wallet's total account value — there is no distinction between realized and unrealized PnL for the purposes of valuation or margin requirements.

Margin Requirements

Margin requirements are defined on a per-market basis by several parameters:

• Initial Margin Fraction — The margin required to open or increase a position, expressed as a fraction. This determines the maximum leverage for the market. For example, an initial margin fraction of 0.05 implies 20x maximum leverage.

• Maintenance Margin Fraction — The margin required to keep a position open and avoid liquidation, expressed as a fraction. This is always lower than the initial margin fraction.

• Base Position Size — The maximum position size that can be held at the market's standard initial margin fraction.

• Incremental Position Size and Incremental Initial Margin Fraction — For positions that exceed the base position size, each additional increment of position size increases the initial margin fraction by the incremental amount. This ensures that larger positions require proportionally more collateral, reducing systemic risk.

Margin Calculation

For a single position, margin requirements are calculated as follows:

Initial Margin Requirement = Initial Margin Fraction × Absolute Position Notional Value

Maintenance Margin Requirement = Maintenance Margin Fraction × Absolute Position Notional Value

Absolute Position Notional Value = Index Price × ABS(Position Quantity)

Position quantities are positive for long positions and negative for short positions. A wallet's USDC quote balance may also be negative.

All margin calculations use index prices rather than order book prices. This reduces the impact of short-term order book volatility on account health and liquidation thresholds.

Wallet-Level Margin

Because Katana Perps uses cross-margin, all positions in a wallet are evaluated together:

Total Initial Margin Requirement = Sum of all position initial margin requirements

Total Maintenance Margin Requirement = Sum of all position maintenance margin requirements

Equity (Total Account Value) = Quote Balance + Sum of all position notional values

Margin Ratio = Total Maintenance Margin Requirement / Equity

Leverage = Total Absolute Position Notional Value / Equity

If the margin ratio rises above 1, the wallet's equity has fallen below its total maintenance margin requirement, and the wallet becomes eligible for liquidation.

Free, Held, and Available Collateral

Several additional values determine what a trader can do with their account:

Free Collateral = Equity − Total Initial Margin Requirement

Held Collateral = Free collateral committed to open limit orders

Available Collateral = Free collateral available for new orders or withdrawals

Held collateral is an important concept: when a limit order rests on the order book, the matching engine holds a portion of the wallet's free collateral proportional to the order's notional value at the market's maximum leverage. For example, in a market with 10x max leverage (initial margin fraction of 0.1), a resting order worth $2,000 notional holds $200 of free collateral.

Canceling an open limit order immediately releases its held collateral. Because equity is based on index prices, price fluctuations may reduce equity below what is needed to support all resting orders. In this case, the wallet's oldest resting limit orders are automatically canceled until sufficient collateral is available.

No collateral is held for market orders or untriggered stop orders.

Initial Margin Fraction Override

Traders can optionally set an initial margin fraction override for specific markets to limit their own maximum leverage below the market default. This is a self-imposed risk control that restricts the maximum position size relative to account equity. The override can be set via the API.

Maximum Open Orders

Each wallet is limited to 250 open orders regardless of available collateral.