Understanding collateral
Important: This product may not be available in your location or jurisdiction.
Warning: Margin trading is a high risk activity. Please read carefully the Risk Warnings and Terms for Margin Services on bullish.com.
What is Collateral?
Collateral determines how much you can borrow and it is a form of security to cover potential losses. Collateral can be liquidated (forcibly sold) to repay your debts or reduce risk by converting to less volatile assets.
How is Collateral measured?
Collateral Value
Collateral Value is a simple USD denominated measurement:
Collateral Value = sum(asset balance * asset Index Price), for all assets in your trading account
Your collateral value varies as your balances and the market prices vary. It is used calculate your margin for leveraged trading.
What assets contribute to collateral?
All liquid assets in your trading account contribute to your collateral. For Bullish all of the following are eligible collateral:
Idle assets not being used for any other purpose
Assets held in open limit orders or AMM Instructions on spot markets
Unsettled derivative profits minus unsettled derivative losses
Note: Only assets have collateral value. Derivative positions do not contribute to collateral. However unsettled profits or losses on derivatives positions will affect your collateral value.
Market Impact and Collateral Haircuts
We do not apply any kind of haircut to your collateral value, as you can see from the definition above. However for risk management it is important to consider the likely extra cost of liquidating large or illiquid positions that will cause market impact during a liquidation.
The Bullish Portfolio Margin system increases your margin requirements, specifically the Liquidity Add-On component, according to expected market impact. This increase in margin requirements is roughly equivalent to how simple margining systems reduce collateral value via collateral haircuts.
Caution: when a limit order is filled this may immediately increase the Liquidity Add-On, which can cause a material impact on your Account Health. For instance, a large buy order for an illiquid asset, bought with USD, may cause an increase in margin requirements when filled. There are similar risks when using spot AMM Instructions as collateral. You are responsible for considering these risks when trading.
Collateral & Market Impact
In the reference tab you can find all assets and their market impact tiers, used in the Liquidity Add-On calculations of the margin requirements.
How do Market Impact tiers work?
The above values are for illustration purposes only: to see the current market impact tiers please visit the reference tab of the Bullish web application.
Each market impact tier has one or more assets that share the same market impact calculations. Each market impact tier contains one or more bands with a notional minimum and/or maximum size for that band, and also has a minimum and maximum market impact (as a percentage of the order size) used in our Bullish Portfolio Margin’s Liquidity Add-on calculations. Assets are considered independently of each other even if they are in the same tier.
Important: Collateral tier values are subject to change at any time.
Viewing your collateral
To view your current collateral:
Go to the left hand navigation, choose Portfolio.
By default, Overview should already be pre-selected. You will see the available collateral in USD.