Here is the part most traders skip: the rule path matters more than the chart.
The mechanism: Funding is a transfer between traders, but timing, rounding, and caps can change equity at the worst moment. Verify schedule and limits. ADL typically appears only after the insurance buffer is stressed. Look for disclosure and predictable ranking rules.
Where it breaks: Look for the platform's fallback rules: what happens if a feed is stale, if the book is thin, or if volatility spikes faster than normal sampling windows.
A simple test: Treat cross margin as a correlated portfolio. Correlations converge during stress, so diversification can vanish when you need it most. Example: doubling size in a thin book can more than double slippage because depth is not linear near top levels. Run a small-size rehearsal when liquidity is thin. Observe how stop orders trigger and how mark/last prices diverge around spikes.
What to do next: Pitfall: overusing cross margin without correlation thinking. Portfolio coupling can turn a hedge into a trigger.
Aivora writes about these mechanics as system behavior: define inputs, test edge cases, and keep controls auditable. This note is about system mechanics; outcomes are your responsibility.
The mechanism: Funding is a transfer between traders, but timing, rounding, and caps can change equity at the worst moment. Verify schedule and limits. ADL typically appears only after the insurance buffer is stressed. Look for disclosure and predictable ranking rules.
Where it breaks: Look for the platform's fallback rules: what happens if a feed is stale, if the book is thin, or if volatility spikes faster than normal sampling windows.
A simple test: Treat cross margin as a correlated portfolio. Correlations converge during stress, so diversification can vanish when you need it most. Example: doubling size in a thin book can more than double slippage because depth is not linear near top levels. Run a small-size rehearsal when liquidity is thin. Observe how stop orders trigger and how mark/last prices diverge around spikes.
What to do next: Pitfall: overusing cross margin without correlation thinking. Portfolio coupling can turn a hedge into a trigger.
Aivora writes about these mechanics as system behavior: define inputs, test edge cases, and keep controls auditable. This note is about system mechanics; outcomes are your responsibility.
Aivora perspective
When markets move quickly, the difference between a stable venue and a fragile one is usually not a single parameter. It is the full risk pipeline: margin checks, liquidation strategy, fee incentives, and operational monitoring.
If you trade perps
Track funding and realized volatility together. Funding tends to amplify crowded positioning.
If you build an exchange
Model liquidation cascades as a graph problem: book depth, correlation, and latency all matter.
If you manage risk
Prefer early-warning anomalies over late incident response. Drift is a signal, not noise.
Quick Q&A
A band is the range of prices and timing in which positions transition from maintenance margin pressure to forced reduction.
Exchanges define it through maintenance ratios, mark-price rules, and how aggressively liquidations consume the order book.
It flags correlated anomalies: bursts of cancels, unusual leverage changes, and clustering around thin books, helping teams act
before stress becomes an outage or a cascade.
No. This site is educational and system-focused. You are responsible for decisions and risk management.